There's no place like Home for profits

The company raised forecasts for the year to February 27 as Argos performed ahead of hopes with like-for-like sales growth of 0.1 per cent and Homebase delivered a 4 per cent rise in same-store sales in the 18 weeks to January 2.

While predicting profits will be 20m higher than the City's forecast of 265m, chief executive Terry Duddy warned the company was braced for

trading conditions to remain challenging in the next financial year.

Home Retail described Christmas toys sales at Argos as excellent and also reported good growth in televisions, personal computers and white goods.

Growth in these areas was offset by market weakness in video gaming, while jewellery was marginally down on a year earlier.

Total sales at the chain were 3.9 per cent higher at 1.92bn after a net five new stores opened in the quarter, taking the portfolio to 744 stores.

At Homebase, the recent recovery continued after total sales grew by 4.6 per cent to 501m in the 18 weeks. Most of this was due to the performance of stores open for more than a year, with growth led by big ticket areas such as kitchens.

Both chains said profit margins were impacted by increased promotional activity and adverse currency movements, which have increased the cost of imported goods.