Argos and Homebase owner Home Retail Group has posted a plunge in interim profits.

The decline was no worse than the City had expected however. The retailer said Argos customers had been particularly hard hit by harsh economic conditions but insisted there remain many growth opportunities.

Argos’s benchmark operating profit plunged 32% to £54.4m in the 26 weeks to August 28. Like-for-like sales fell 6.5% and total sales were down 4% to £1.81bn.

Home Retail Group chief executive Terry Duddy said: “Argos’ core customer demographic has been more impacted by the economic conditions. Unit volumes sold and shopping frequency have both increased at Argos, with particular success in small-ticket areas such as toys and homewares. However, the weakness in core customer demand has been pronounced in areas such as big-ticket furniture.

“This latest performance at Argos has still seen market share held or gained in most product categories, which remains encouraging.”

DIY Chain Homebase’s profits were down 6% to £46.2m on sales down 1.2% to £855.3m.

At group level, benchmark pre-tax profit slid 23% to £94.7m on sales down 3% to £2.72bn.

Duddy said: “We are about to enter our best trading period and, whilst we are planning cautiously, we do so from a position of operational and financial strength.

“This position also allows us to continue to invest in both Argos and Homebase, further extending our multichannel leadership and differentiated formats. This will maintain our competitive advantage and ensure the group remains well-placed for the future.”