Argos, Home Retail’s flagship chain, delivered record profits last year, but the outlook is cloudy.

Home Retail boss Terry Duddy expects like-for-likes to fall “in the short term” at the catalogue store group, as well as at stablemate Homebase, the embattled home enhancement chain.

Duddy said Home Retail was well-positioned to endure the consumer downturn. Over the past year, it has leapfrogged Comet to become the number two in consumer electronics and wrung benefits from overseas buying.

Argos’s value stance – bolst-ered by the addition of own-brand Argos Value – its multi-channel strength and opening plans should all help in the coming year. Despite its problems, gross margin gains have been made at Homebase and further improvement is expected.

Home Retail revealed a 15 per cent rise in preliminary profit to£433 million on sales up 2.3 per cent to£5.99 billion.

Citi, advising hold, said: “Undeniably, the business faces difficult macro headwinds, with the risk to the downside.”

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