Home Retail Group has warned that tough trading conditions are likely to result in like-for-like sales falls at its Argos and Homebase chains.

As Home Retail posted double-digit earnings growth for past year, chief executive Terry Duddy warned that the weakening consumer environment would hit comparable store sales “in the short term”, but reassured: “The group is well positioned operationally and financially and has a clear strategy to deliver long-term growth”.

Catalogue store group Argos has got off to a good start in this financial year and is trading in line with management expectations. DIY chain Homebase has begun the year “weaker than anticipated”.

Duddy expected initiatives such as increased direct buying from overseas – which accounts for almost a third of group sales – and cost efficiencies to underpin the group’s position.

Flagship chain Argos’s multichannel strength, value offer, store opening programme and distribution efficiencies should all help it ride turbulence, said Duddy.

In the year to March 1, Home Retail posted a 15 per cent rise in benchmark pre-tax profits to£433 million on sales up 2.3 per cent to£5.99 billion.

Sales at Argos rose 0.7 per cent like for like and total sales increased 3.8 per cent to£4.32 billion, delivering an operating profit up 16 per cent to£376.2 million.

Homebase suffered a 4.1 per cent like-for-like sales decline – a 1.6 per cent fall in total sales – to£1.57 billion. Profit was down 16 per cent to£45.1 million.

Despite Homebase’s problems, Home Retail insisted the chain had “performed well operationally” and had improved margins.