Home Retail Group has revealed better-than-expected second-quarter sales at Argos and Homebase.

Analysts had been anticipating like-for-like sales to fall 1.6% at Argos and 2.5% at Homebase.

However, Argos sales fell by 1.4% over the 13 weeks to August 29, while those at Homebase rose by 1.6%. Gross margins fell by 125 and 400 basis points respetively.

Home Retail chief executive Terry Duddy said both chains had performed well and delivered cash margin ahead of management expectations.

He said: “Combined with exceptionally good cost management, this means we now expect group benchmark profit before tax for the first-half to be broadly in line with last year’s £121 million.”

He added: “We approach the key Christmas trading period from a position of operational and financial strength, but continue to plan cautiously for consumer demand.

“We will also have a more significant impact from adverse currency movements in the second half of the year.”