ARGOS and Homebase owner Home Retail Group (HRG) has increased its full-year profit forecast by £20m after sales in the second half of 2009 beat expectations.
The retailer now expects its pre-tax profits for the current financial year to 31 March to hit £285m.
The revised figure came as a trading statement showed that Argos increased its like-for-like sales by 0.1 per cent in the 18 weeks to 2 January.
Homebase sales grew by four per cent over the same period.
The group said toy sales at Argos and homeware at Homebase had helped to boost the figures.
But HRG chief executive Terry Duddy warned that trading conditions would "remain challenging" in 2010.
He said: "Argos has performed ahead of our plans in its most important trading period, and Homebase trading has continued to be strong.
"There was also further excellent cost management across both businesses.
"We now expect Group benchmark profit before tax for this financial year to be about £20m ahead of the current market consensus of £265m.
"Due to the uncertain economic outlook, we expect trading for the next financial year to remain challenging. We will plan accordingly from a position of continued operational and financial strength."