Argos like-for-like sales plummeted 8.8% for the 18 weeks to December 31.
Total sales dropped 7.8% at the retailer to £1.7bn.
The multi-channel retailer said gross margin declined approximately 50 basis points over the period which was down to increased promotional activity and the adverse impact of shipping rates.
Online sales remained strong at Argos, jumping 38% over the period, and now accounts for 41% of total sales.
The retailer’s sister chain, DIY specialist Homebase’s like-for-likes also dipped 2.6% to £475m. The drop was driven by a decline in big ticket sales.
Duddy said the trading environment was both “volatile and demanding”
The group said it had managed its business tightly and expects group pre-tax profit to come in around the mid-point of analyst consensus of £78 to £125m, however it will “significantly cut” full year dividend for its current financial year.
Home Retail will close its UK homewares trial format HomeStore&More at the end of February. The closure costs will be £10m.
Duddy said: “We will continue to plan cautiously with an ongoing focus on managing robustly both the cost base and the cash position of the group while prioritising our investment in the ongoing development of our multi-channel capabilities.”