Home improvement retailer posts 2.6% like-for-like sales decline for 18 weeks from August 28 to December 31 but still manages to grow gross margin during "volatile" trading period.
On a total sales basis, revenue was down 2.5% to £475m for the 18-week period, impacted, said the firm, by a decline in sales of big-ticket ranges and a challenging market. Sales across the remaining categories were broadly flat.

However, the retailer was able to increase its gross margin by 25bps and yet again outperformed Home Retail Group stablemate Argos, which posted a lfl sales decline of 8.8%, with gross margin down 50bps, impacted by heavy discounting.

Home Retail Group chief executive Terry Duddy said of the results: "In a trading environment that has been both volatile and demanding, Homebase has again seen more resilient sales. Argos sales continued to be impacted by the market decline in consumer electronic categories, however we saw internet penetration reach over 40%."

He added: "We have managed the business tightly over the peak trading period and expect group benchmark profit before tax for this financial year to be around the mid-point of the current analyst range of £78-£125m."

As the leases on several Argos stores near their expiry date, Home Retail Group has used the opportunity to rationalise the chain and today announced a number of Argos store closures, which will take place over the course of the financial year. It is unknown exactly how many or which branches will be affected but the group explained that the store portfolio would be "marginally down" at the end of this financial year from the 751 stores listed at the start.

Mr Duddy continued: "We will continue to plan cautiously with an ongoing focus on managing robustly both the cost base and the cash position of the group, while prioritising our investment in the ongoing development of our multi-channel capabilities."

The statement also revealed that the Home Retail Group board expects to take a "significant cut" in its full-year dividend. The group will release its full-year results on Wednesday, May 2.