Home Retail reported that it would beat the City’s full-year profit forecasts despite a 9.4% decrease in like-for-like sales at flagship chain Argos.

The group expects profits to come in at about £290m, helped by a better than anticipated performance from the Homebase DIY chain in the eight weeks to February 27.

Home Retail chief executive Terry Duddy said the shortness of the reporting period and volatile trading conditions makes it hard to read longer-term shopper trends.

JP Morgan Cazenove has an overweight advance and said the retailer had suffered from an “unfortunate” foreign exchange hedging position “rather than being undermined by a new competitive dynamic”.

But Numis, recommending hold, said: “We think Home Retail will be challenged to make progress in 2010/11.”

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