Sales at Argos dropped nearly 10% in Q1, but remained steady at stablemate chain Homebase, according to figures released by parent company Home Retail Group (HRG) today.
Argos saw total sales drop 8.1% to £817m for the 13 weeks to May 28, falling 9.6% on a like-for-like basis. This was mainly due to the decline in the consumer electronics market, which fell "significantly more than we anticipated", said HRG.

Toys and seasonal products such as garden furniture and barbecues performed well in the quarter.

Gross margin fell by 75 basis points, driven by adverse currency and shipping costs, together with stock clearance activity.

HRG chief executive Terry Duddy warned: "For Argos, the consumer electronics market represents a substantial proportion of its sales and has experienced a further significant decline. The difficulty of this market, together with the volatility of overall sales, has made the balance of the year more difficult to predict."

The multichannel retailer saw the number of downloads of its iPhone app reach 1.7m, while internet penetration remained strong, representing 33% of Argos' sales, a small increase on the same period last year.

At Homebase, total sales declined 0.1% to £458m, with like-for-like sales increasing 1.6% due to strong performances in seasonal-related categories such as garden furniture, plants and exterior decorating.

Big-ticket items were marginally down, although fitted bedroom furniture performed well, benefiting from the rollout of the retailer's installation service and instore displays.

Bathrooms also performed well, while sales for the remaining categories were marginally down.

Gross margin declined by 50 basis points, driven in the main by adverse currency and shipping costs, as well as a strong performance on low-margin seasonal products

Mr Duddy concluded: "Trading conditions, particularly at Argos, have proved to be more difficult and volatile than anticipated. Despite this the group has gained or held market share in its businesses... While we remain cautious for the balance of the financial year, we are focused on our operational performance while continuing to invest across the businesses."