Home Retail Group's trading statement for Q1 saw Homebase kick off 2015 with a good performance, whilst Argos reports declines, impacted by poor performance in electricals.
The 5.4% LFL increase comes despite the impact of 17 store closures, which reduced sales by 7% for the 13 weeks to May 30, 2015.. The Homebase store estate now stands at 279 outlets. Total sales for the home enhancement retailer declined by 1.6% to £438m during the quarter.

Revenue was boosted by sales growth across big ticket, seasonal and the remaining product categories. However, this growth was partly supported by both the trade transfer and the stock clearance sales benefits attributable to the distribution centre and store closure programme.

Naturally, gross margin took a knock from the stock clearance activity and an increased level of promotional sale, resulting in an approximate 175 basis point decline.

Total sales at Argos declined by 2.6% to £846m in Q1, down 3.9% on a like-for-like basis. Sales in electrical products declined, which the retailer anticipated, partially offset by growth in sales of mobiles.

Net new space contributed 1.3%, as Argos opened a net 33 stores, taking its portfolio to 788. The net increase comprised a total of 35 new stores, which included 32 digital concessions within Homebase, two digital concessions within Sainsbury's, one small format digital store, together with two store closures.

Internet sales for the first quarter represented 44% of total Argos sales, up from 42% for the same period last year. Within this, mobile commerce sales grew by 15% to represent 25% of total Argos sales, up from 21% in the previous year.

Gross margin increased by an approximate 50 basis points, with improvement driven by favourable currency and shipping costs and what the company described as "the timing benefit of a small number of other positive items, which are expected to reverse later in the current financial year". The increases were partially offset by an increased level of promotional sales.

Home Retail Group chief executive John Walden commented: "The performance at Argos in the quarter was broadly in line with both our expectations and previous guidance, with sales being adversely impacted by market declines in key electrical and seasonal product categories.

"Homebase has made a good start to the year, successfully annualising a strong like-for-like sales performance last year.

"We continue to expect that sales will be challenging during the first half at Argos, but we look forward to a stronger second half as we progress the Transformation Plan and introduce new propositions more broadly to the market."