MILTON KEYNES: Homebase owner, Home Retail Group, posted an expected 23% fall in first-half profit as cash-strapped low-income shoppers trimmed their spending.
Sales at Argos stores open over a year fell 6.5%.
The firm, which owns Argos and Homebase, said on Wednesday it made an underlying pretax profit of £95m in the six months to 28 August. That was in line with company guidance of a 20-25% on the £123m made in the same period last year. Total sales fell 3% to £2.72bn.
Home Retail has been particularly hard hit by a fall in consumer confidence because it sells discretionary goods to mostly lower income shoppers, which have not benefited as much from big falls in mortgage rates as those with higher incomes.
With the group exposed to the mass market consumer through Argos and the housing market through Homebase, it is seen as vulnerable to the public sector spending cuts the government will announce later on Wednesday.
Terry Duddy, chief executive said: "We are about to enter our busiest trading period, and whilst we are planning cautiously, we do so from a position of operational and financial strength,"
Last month Home Retail lowered its guidance for year to end-February 2011 underlying pretax profit to £250-275m, down from the £293m made in the previous year.
Shares in Home Retail, which last month lost its place in Britain's FTSE 100 index of leading companies, have lost a quarter of their value over the last year. The stock closed at 220p on Tuesday, valuing the business at £1.83bn.
