Argos and Homebase owner Home Retail Group sees sales rise

The owner of the Argos and Homebase retail chains has said its turnaround plans are on track with both divisions reporting a rise in sales.

Home Retail Group said total sales in the six months to 31 August rose 3% to £2.59bn, with Argos up 2.3% and Homebase 5.9% higher.

Pre-tax profits fell to £14.2m from a re-stated £46.7m last year.

But after stripping out one-off items, the underlying profit was up 53% to £27.4m.

After seeing profits decline for five years in a row, Home Retail Group is updating its Homebase stores and seeking to revamp Argos by increasing sales through its website.

The firm said that total internet sales now accounted for 43% of Argos' total sales, with sales generated through smartphones and tablets representing 16% of sales.

Last month, Argos announced a tie-up with eBay, whereby shoppers will be able to order selected goods from eBay and pick them up from an Argos store.

Chief executive Terry Duddy said: "Argos and Homebase are making good progress with their investment plans, and remain on track to deliver their long term strategic objectives."

However, he added that the general retail climate remained tough.

"As we look ahead to the second half of the year, we expect consumer spending will remain subdued, and whilst some macroeconomic indicators are improving, these have not yet led to an increase in household disposable income."

Heatwave boost

Mr Duddy, who is stepping down as Home Retail Group chief by next July after 15 years at the helm, said the group was in "excellent shape" in the run-up to the key Christmas trading period.

Argos's underlying operating profits jumped £7.7m in the six months, up from £3.3m last year, with the company saying there had been particularly strong demand for tablet computers.

Argos recently followed Tesco in announcing the launch of its own-brand tablet, called MyTablet, which will be on sale for less than £100 as part of its Christmas product range.

Home Retail Group also said there had been a reversal in the fortunes at its Homebase DIY chain.

A surge in demand for garden furniture in the summer heatwave helped Homebase's like-for-like sales rise 5.9%, marking the strongest growth since it was bought by Home Retail Group in 2002.

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