D R A F T
Guidelines for B.A.T Stores : July 1987
Although Argos and The Jewellers Guild are technically subsidiaries of
B.A.T Stores they should be considered iudividuaily, with separate budgets
and plans prepared for each business.
ARWS
General
1. The prime objective for Argos should continue to be the maintenance of
rapid rates of growth In sales turnover and profits through the
expansion and extension of Argos in the UK.
2. However, Argos should also continue to consider the potential for
Launching or acquiring retailing businesses based an new concepts
which might provide longer-tarn profitable growth opportunities.
Financial Guidelines
3. Returns : Argos should achieve a minimum historic cost return of 20
per cent of average not trading assets employed during the year.
4. Dividends : The minimum dividend declarations expected from Argos
are:- 1987 1968 1989 1990 1991 1992
fa 23 27 32 39 49 60
S. Dobt/Equity : Argos should seek to --raise its year-end cash deposits
with 3AT17 and peak borrowings during the year should be kept below
50 per cant of equity.
Specific Priorities
6. Argos should develop plow to secure an accelerated growth La sales
and profits, with the specific objective of achieving trading profits
of 1100m by 1989 or 1990. Priority should be given to the development
of Argos rather than the introduction of now recaillng concepts and,
in particular, plans should be developed for extending the chain of
Superstares and, subject to a satisfactory final evaluation of the
pilot stores. Best Sellers. When seeking suitable properties for
expansion,- preference should be given to securing parcels of
properties rather than to obtaining sites through the acquisition of
a single. large retailing operation.
7. Argos should continue to investigate whether, and to what extent, it
might be appropriate to reformat the existing conventional showrooms.
8. Further consideration should also be given to developing Argos'
Involvement La Corporate Sales.
In reviewing the potential for an extension into new areas of
retailing, a first option to be considered should be the possibility
of entering the mail-order business, probably through acquisition.
10. Other options should also be considered but on the understanding that
if it were decided to go shead it Ls likely that the CPC would wish to
have one option tested at a time and to have the accelerated Argos
development plan firmly established before testing now Concepts.
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11. Argos should take steps to relieve the current pressures an Its senior
management and to provide sufficient management capacity both to
support the committed Argos expansion plans and to continue the review
of new retailing development options.
12. There should also be continuing emphasis an improving productivity and
of and an maintaining I.T. *yet&=, computer processing
capacity and other support equipment at levels which will safeguard.
the competitive advantage of the business.
70 JZWELLMLS GU=
1. The immediate priority for The Jewellers Guild is to achieve the
tarptted levels of performance in 1987 and ta complete the evaluation
of the concept by reference to the experience obtained during the
year.
2. At the same time, plans should be prepared for the further expansion
of the busiue" in 1988 and beyond an the assumption that the pilot
operation is judged to have boon successful.
Financial Guidelines -
3. As The Jewellers Guild is still in a development stage, its
performance during 1987 will be monitored against key operating
criteria, Including an adjusted gross margin of 44 per cant; an
average branch contribution of 17.2 per cant; and first year
ammu&lis4d average sales of at least IA20th per store for new
openings.
4. In the longer term, The Jewellers Guild should achieve a -W==
historic cost return of 20 per cant of average not trading "sets
employed during the year.
5. Formal dividend and debt/equity guidelines will be developed after the
assessment of The Jewellers Guild's 1987 performance.
=IWA,
22ud July 1987
r1k.)
CD
BAT Industries document for Province of British Columbia 23 April 1999