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Homebase sales flat

Published:  11 March, 2011

UK: MILTON KEYNES: A profit warning from Home Retail Group, the company behind Argos and Homebase, and a bleak forecast for the next two years, confirming reports of a slowing DIY market.

Like-for-like sales at Homebase were better than expected, up 3.8%, compared with a fall of 1.2% in the 18 weeks to 1 January.

Home Retail Group's chief executive Terry Duddy said: "There are clear signs of further pressures on consumer spending, with recent trading conditions, particularly at Argos, proving to be more difficult and volatile than we anticipated." Like-for-like sales at Argos dropped 4.6% in the eight weeks to 26 February, worse than City forecasts of a 1.3% fall, and compared with a 4.9% decline in the 18 weeks to 1 January.

Gross margin was up 300 basis points at Homebase but fell 150 basis points at Argos.

Home Retail expects a low-to-mid-digit percentage sales decline at Argos and a broadly flat performance at Homebase. Costs will also be higher, year on year, in both businesses.