Home Retail Group has revealed better than expected trading in the first half as it makes market share advances at both Argos and Homebase.

Pre-tax profit before exceptional items grew 1% to £123m in the 26 weeks to August 29.

Revenue across the group increased 3% to £2.8bn, with like-for-like sales at Argos declining 2% while rising 3% at Homebase.

The retailer said online now account for 28% of sales at Argos, with online Check & Reserve growing nearly 50%.

Gross margins were hit at both chains, down around 100 basis points at Argos and about 325 basis points at Homebase.

Nine stores were opened during the half, taking the portfolio to 739 stores.

The retailer will open around 20 new Argos stores a year, while at Hombase relocations and refurbishments will continue.

Home Retail Group chief executive Terry Duddy said: “The trading performance at both Argos and Homebase exceeded our expectations. Whilst the consumer environment proved challenging, we have adapted well and maximised the benefit from more favourable weather conditions for Homebase. Our focus on cash margin and an extremely tight control of costs have been the clear drivers of a successful first half performance.

“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 during this period. The Group’s operational and financial strength will continue to sustain our competitive advantage in the market place.”