Homebase and Argos owner Home Retail Group saw its annual profits slump by a quarter last year amid falling consumer spending.
Home Retail said the group “cannot be immune” from the economic downturn, posting pre-tax profits of £328 million in the year to February 28, compared with £433 million a year earlier.
The group also warned of tough times ahead and said it expected prices will rise as retailers pass on the cost impact of a weak pound.
Homebase saw its like-for-like sales fall 10.2 per cent while Argos dropped 4.8 per cent. Both firms have suffered in the downturn as households cut spending and the stagnation in the property market weighs on retailers.
Home Retail said total consumer spending in the £60 billion home and general merchandise market “declined marginally” in the year.
But it said it had a greater exposure to some types of product where sales were particularly weak, such as furniture, homewares and DIY items.
The firm predicted its product markets would see significant impact from the lower pound. It said prices were likely to rise although it would stay “competitive”.
Home Retail plans to slash costs to counter the effects of further declining sales and inflation.
