Sales drop at owner of Argos and Homebase

Home Retail, the owner of Argos and Homebase, reported a big drop in sales in the eight weeks to 25 February, sending shares down 0.6 per cent.

Argos sales decreased 8.5 per cent, while like-for-like sales at Homebase dropped 6.5 per cent, worse than the full year decline of 2 per cent.

Despite this Home Retail said it was on track to meet analysts’ expectations for a full-year underlying profit of around £100m, down from £254m the previous year.

This will be the firm's fifth consecutive year of falling profits.

Finance Director Richard Ashton said that a more modest decline in the current financial year was to be expected, with an underlying profit of £80m.

"Trading remains tough and there is a long way to go before we begin to see margins recover at Argos, in our view," Espirito Santo analysts said in a note.

However, the company, Britain’s largest household goods retailer, said there were reasons to be optimistic about the outlook for the coming year, with inflation falling and increased spending at events such as the Olympic Games in London and the Queen’s diamond jubilee.