Home Retail said it expected to post full-year profit before tax in line with expectations despite underlying growth at its Argos and Homebase chains over the Christmas period missing forecasts.

The household goods retailer said it had taken a different approach to Christmas trading this year, after the adoption of the Black Friday promotional day at the end of November skewed normal shopping patterns.

With Argos sales up 45 per cent on Black Friday, the group then sought to protect its profitability by not chasing sales with further discounts in the run up to Christmas.

As a result, sales from Argos stores open over a year were up 0.1 per cent in the 18 weeks to January 3, well below the 2 per cent growth that had been expected by analysts. Its gross margin was up around 25 basis points.

At Homebase, like-for-like sales were up 0.6 per cent, and again well below the 4.1 per cent that had been forecast by analysts. The gross margin there was down around 100 basis points.

“In anticipation of volatility in trading patterns and the profit pressure caused by aggressive promotions, Argos pursued a more cautious trading stance over the period,” said Home Retail chief executive John Walden.

“This resulted in broadly flat like-for-like sales, but achieved both improved gross margins and good cost management.”

Reuters