Home Retail Group today posted better than expected second-quarter sales at both its Argos and Homebase businesses.
"Argos and Homebase performed well, delivering cash margin ahead of our expectations," said chief executive Terry Duddy.
"Combined with exceptionally good cost management, this means we now expect group benchmark profit before tax for the first half (to August 29th) to be broadly in line with last year's £121 million."
Like-for-like sales at the 739-store Argos business, the group's town centre catalogue-based retailer, fell 1.4 per cent over the 13 weeks to August 29th, while underlying sales at the 350-store home improvements retailer Homebase increased 1.6 per cent.
Gross margin was down by 125 basis points at Argos and down 400 basis points at Homebase.
Analysts were expecting like-for-like sales to fall 1.6 per cent at Argos and fall 2.5 per cent at Homebase, with gross margin down 1.35 percentage points at Argos and down 2.20 percentage points at Homebase, according to a poll of analysts provided by the company.
At Argos a strong performance in televisions and personal computers offset weakness in the video gaming market. At Homebase sales were stimulated by promotions, with growth led by big ticket items, particularly kitchens.
Shares in Home Retail have increased in value by 32 per cent over the last three months on recovery hopes, outperforming the DJ Stoxx European retail sector index by about 12 per cent.
The share price closed yesterday at 328 pence, valuing the business at £2.88 billion.
Kesa Electricals, Europe's third largest electrical retailer, also reported better than expected trading today.
Reuters