The Irish group, which owns Woodie's DIY and Atlantic Homecare, revealed that underlying operating were profits up 13% to €54.7m for the year, but that sales in its retail division dropped by 4.7% to €219.7m.
Like-for-life turnover overall for UK merchanting businesses - which include Plumbase and Buildbase - saw growth of 4.3%, and revenue overall for the group soared by 3% to €2.05bn for the year ended December 31, 2011.

The decline in the company's retail businesses was blamed on declining disposable incomes, a weak labour market and a high savings ratio. The group said: "Core retail sales volumes registered growth for the year following a recovery in the last quarter that was partly weather-relate and also influenced by discounting and promotions.

"Discretionary spending categories including DIY experienced a further decline in volumes as financially stretched households remained cautious about the outlook for their personal finances."

Woodie's was reported to have had "a strong start to the year, benefiting from easier comparatives and driven by very favourable weather conditions in the first four months that brought forward sales of gardening and seasonal products.

"These early gains were more than offset by tougher trading conditions in the seasonally important months of May and June."

Woodie's store footfall was reportedly strong and almost nine million customer transactions were completed during the course of 2011. However, the retailer's sales figures suffered from lower spends on high ticket items including BBQs, garden furniture, lawnmowers and furniture.

It was better news for sales of DIY, decorative and building products, which were described by Grafton as "resilient". Electrical, paint and decorative products also reportedly "benefited from improved merchandising."

The year also saw new ranges of own-brand power and hand tools, timber flooring, floor tiles and lighting successfully rolled out across Woodie's stores.

The Grafton Group said: "A reduction in sales of higher value lower margin products, reduced discounting on seasonal ranges and product sourcing gains contributed to an increase in gross margin. The improvement offset most of the impact on profit of lower turnover."

Looking ahead, the group is planning extensions to two long-established Woodie's stores in Glasnevin, North Dublin City, and Blanchardstown, West Dublin to be completed in April 2012.

The group's chief executive officer Gavin Slark, said: "The turnaround in performance that commenced in 2010 continued in 2011 in challenging markets with savings realised from cost reduction programmes.

"The Group is well positioned to make further progress in what we believe will be subdued markets in 2012. We will continue to focus on margin enhancement, cost management and cash generation and evaluate value adding expansion opportunities."