Catalogue store group Argos is to revamp its brand, including its logo, to reflect how the business has changed in recent years.

The overhaul will be seen first in new stores and its spring/summer 2010 catalogue, Argos parent Home Retail chief executive Terry Duddy revealed at the interim results.

Argos’s sales rose 1.7% to £1.89bn in the first half, when benchmark operating profit fell from £85.5m to £79.7m. Like-for-likes fell 2.1%. Duddy said performance had exceeded his expectations and a brand “refresh” would modernise Argos’s image.

The retailer reported: “Since the brand was last updated, Argos has become  multichannel integrated, expanded through Argos Extra and internet-only ranges and developed more up to date store formats.

“A programme to improve customer understanding and refresh the brand has therefore begun. This programme will run over a number of years to update the brand across all operations.”

Duddy said Chad Valley, acquired after the collapse of previous owner Woolworths, has become one of Argos’s leading toy brands. He suspected traditional toys may be one of this Christmas’s winning categories.

Homebase’s sales rose 4.4% – up 2.8% like for like – to £866m. Home Retail’s group sales climbed 3% to £2.81bn, generating benchmark pre-tax profit up 1% to £123m. Gross margin fell 100 basis points at Argos and 325 at Homebase.

Duddy said: “We continue to plan cautiously for consumer demand over the remainder of the financial year and there will also be a more significant impact from adverse currency movements.”

Seymour Pierce analyst Freddie George was bearish about the performance. “The weakness on gross margins indicates both companies are under pressure from competition.” Argos faces growing rivalry from food retailers and a better performance from electrical retailers, and Homebase is becoming more dependent on discounting, he said.