Home Retail Group chief executive Terry Duddy said: “Core customers at Argos have continued to be under greater pressure and there were ongoing challenging conditions across several product categories, most notably consumer electronics.
“As we now enter our busiest trading period market, conditions remain both weak and volatile, and in these early weeks of the second half we have not seen the improvement in sales that we had anticipated.” Like-for-like sales at Homebase, which operates 342 stores, were down 0.6%, as sales of big ticket items remained challenging, although sales of bedroom furniture and bathrooms benefited from new ranges and installation services.
Homebase grew its share of the home improvement market, which has been badly hit in recent years amid falling house prices.
But the chain’s operating profits fell 35% to £29.9m. The group’s profits disappointed the City, which had forecast £30m.
Freddie George, an analyst at Seymour Pierce, cut his full-year profits forecast from £135m to £125m.
He said: “We continue to have significant reservations on the long-term outlook for both the Argos and Homebase businesses.”