Profits at Great Universal Stores’ home shopping division, Britain's largest, crashed from £106 million to £21m during the year to March 31 it was revealed yesterday.

In a bid to cut costs, GUS now plans to shed its lower-spending catalogue customers. It will also combine the ailing home shopping business with its Argos catalogue retail chain, triggering eight hundred job losses phased over the next two to three years.

Chief executive John Peace claims the new strategy will deliver £80m in annual cost savings. “While conditions in the home shopping market have been very testing, our other businesses have performed well,” he said. “Following restructuring, the group is much better positioned to deliver growth."

Argos recorded profits up from £117m to £137m, with like-for like sales 14% higher than the previous year - compared with a 7% decline for UK home shopping sales. Experian, GUS’s data and credit-checking division increased profits by 8 per cent; while the fast-recovering fashion division, Burberry, saw profits double to £21.7m (£10.7m).

News sources: The Times (London) and BBC Online Business News (UK)