Home Retail Group pre-tax profits slumped by 60% as Argos battled a weak electricals market.
Home Retail Group pre-tax profits for the year to February 25 were down 60% to £102m while operating profit fell 61% to £98m.
Total sales at Argos fell more than 7% over the year to £3.8bn while total sales at DIY chain Homebase fell by 2.6%to £1.5bn.
Operating profits at Argos sank 60% to £94.2m, and profits were also lower at Homebase where like-for-likes were down 2%.
Home Retail Group chief executive Terry Duddy said: “Prospects for the 2012-13 financial year remain uncertain as consumers’ disposable income is impacted by ongoing inflationary pressure, together with low levels of consumer confidence.”
The company said laptops, tablets and homewares had been strong performers at Argos but “this was more than offset by weakness in other product categories, most notably in consumer electronics”.
It said the consumer electronics had seen “market decline of around 20% in the year and, excluding the growth in laptops and tablets, accounted for around 80% of the sales reduction in the year”.
The group said it would be scrapping its final dividend.
Argos said 10 are stores are likely to be closed and others to be moved, rather less than some commentators had expected. Argos has approximately 230 store lease renewals due over the next five years.
Visitors to the Homebase website have grown by 15% during the year and reserve and collect sales have risen by 35%. Argos again grew its multi-channel sales proportion, representing £1.9bn or 48% of its sales, up from 46% a year earlier.
Argos has continued to trial selling third party products through its website and now has around 9,000 internet-only lines in addition to its core 24,000 lines in its catalogue. Argos continues to trial its TV shopping channel.
During the year the group acquired the exclusive use of the Habitat brand and three of its London stores. Habitat product will be introduced into both Argos and Homebase during 2012.
Home Retail chairman Oliver Stocken said: “While the group’s performance in the short term cannot be immune from the economic environment, we continue to focus on its strategic advantages to ensure that it will be well positioned for the economic recovery over the long term.”
The company said prospects for the 2012/13 financial year “remain uncertain” due to low levels of consumer confidence but said the group has a net cash balance of £194m allowing it to invest in multichannel and leave it “well positioned” for a long-term economic recovery.
Home Retail said the programme to refurbish the Argos store network is “progressing well” after 350 stores underwent a revamp.
Homebase launched a Create Your Own Look online decorating tool, introduced in the Aylesford prototype store, in January 2012.