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IS IT SUNNY SIDE UP FOR HOME RETAIL?

<strong>JOHN STEVENSON </strong> KBC PEEL HUNT<br />&ldquo;Home Retail Group&rsquo;s first quarter trading update has seen a notable boost to seasonal lines as Homebase at last delivers like-for-like sales growth. Argos sales were also ahead of expectations, although margins remains under pressure. We note a strong performance in toys, no doubt benefiting from the demise of Woolworths, a factor that may provide a more material boost for peak trading later this year.&rdquo;<br /><br /><strong>RICHARD HUNTER </strong>HARGREAVES LANSDOWN<br />&ldquo;The Homebase increase in sales has been attributed to a bout of good weather in the period, while at Argos the fall in sales is less than many had feared. The Argos model presupposes a more discounted offering, provided as it is in part over the internet, which continues to appeal to the cost-conscious consumer. The numbers may prompt some upgrades with the potential of a muted recovery vaguely on the horizon.&rdquo;<br /><br /><strong>SAM HART </strong> CHARLES STANLEY<br />&ldquo;The group performed very well in the first quarter with a boost from good weather. The 3.8 per cent like-for-like sales jump was particularly surprising as consensus forecasts were flat. However, going forward the consumer backdrop is going to be tough and furniture sales, which are intrinsically linked to house purchases, will continue to suffer. The group will also feel the impact of the weak pound hit its margins.&rdquo;<br />