While the weather has hit 2010 sales at both Homebase and Argos, full-year results, released today, show that Homebase outperformed its stablemate in the 52 weeks to February 27.
The 12-month period saw like-for-like sales at Homebase reach £1,57m, an increase of 2.7%. The same financial year saw Argos post a 2.1% decline in lfl sales.

Both chains have struggled in the first eight weeks of 2010, with factors such as the wintry weather and the VAT increase to blame. However, Homebase is proving more resilient with a lfl decline of 0.6% compared with Argos' 9.4% decline.

Pressures on margin, however, were more obvious at Homebase, which saw gross margin decline by 350bps (approx) over the year, compared with Argos, which only lost 175bps. The company said this was "driven principally by the anticipated net impact of adverse currency movements."

Commenting on the results, HRG chief executive Terry Duddy said: "Group benchmark profit before tax for the year will be around £290m, slightly ahead of current market expectations. This is a good outcome to a challenging year, and is combined with excellent cash generation.

"The final short trading period reported today saw volatile trading patterns, making it difficult to assess any changes in underlying consumer demand. For the new financial year, we continue to plan cautiously given the uncertain economic outlook, but do so from our position of operational and financial strength."

While slightly ahead of expectations, the results have failed to impress the City. Credit Suisse, for example, rated the company 'Underperform' saying: While difficult to extrapolate trends, the Argos LFL looks weak...Homebase LFL was relatively resilient versus expectations with a positive impact they say from what had been weather delayed deliveries but the gross margin was worse, perhaps as a result of promotion. Homebase is a weak player in a tough DIY market and the situation is unlikely to improve with pressure on consumer spending and annualisation of capacity reduction from last year...We remain sellers and believe that structural risks and increased competition are likely to restrict Argos' ability to grow medium term sales and EBIT margins."