Argos boss remains upbeat despite sales slump

Home Retail's Argos chain has already suffered as cash-strapped, low-income shoppers have cut back spending on big-ticket items such as furniture, televisions and video games.

The group, Britain's No 1 household goods retailer, said it is approaching the key Christmas trading period cautiously.

Argos, which has more than 50 stores in Yorkshire, said like-for-like sales fell a sizeable 6.5 per cent, leading to a four per cent total decline in sales for the catalogue business, at 1.8bn.

The group warned that Argos's core customers had been hit harder by the economic climate and, while sales of smaller products, such as toys, are improving, demand for big-ticket items is suffering.

There was a better performance at Homebase, which has more than 20 stores in Yorkshire, as like-for-like sales fell just 0.8 per cent, to 855.3m.

Despite the gloomy outlook for consumer sentiment following yesterday's government Spending Review, Home Retail insisted it does not expect trade to deteriorate after the first-half profit slump.

Chief executive Terry Duddy said the company's scale, strength in online and multi-channel retailing, cost-cutting credentials and strong balance sheet will help it to ride out the impact of government spending cuts.

"One of the things that I'm very clear about is that Argos is in a very good place as far as the future of shopping is concerned," he said, noting that more than 30 per cent of its sales are now over the internet.