The Home Retail Group-owned retailer reported a 2.8% sales decline in Q2, impacted mainly, said the company, by the closure of six stores during the period - a 2.9% reduction in net store space.
Total sales at Homebase declined by 2.8% to £390m for the 13 weeks ended May 31. However, a strong Q1, where sales grew 5.5%, offset the drop and meant total sales for Homebase for the first half of the year were up 1.5%.

Like-for-like sales saw a 0.1% uplift in the quarter, 4.1% for H1 overall, boosted by a growth in sales of big-ticket lines. This increase offset a reported decline in sales of seasonal products following what was a very strong performance in this category in the same period last year, said Homebase. Like-for-like sales for the first half jumped 4.1%, helped again by a strong Q1, where like-for-likes were up nearly 8%.

The home and garden retailer also posted a gross margin decline by 75 basis points for the first half, driven by stock clearance activity as a result of a total of seven store closures during the six-month period. An increase in sales of margin-dilutive big-ticket products also had an effect. The closures bring Homebase's total store portfolio to 316 outlets.

Meanwhile, Home Retail Group stablemate Argos had a stronger Q2, with sales up 1.4% to £901m. Unlike Homebase, which is rationalising its portfolio, Argos opened 13 new stores in the quart, increasing net space by 0.2% and boosting revenue. The new additions, including nine Argos concessions within Homebase stores and four small-format stores, take the Argos portfolio to 747 stores.

Like-for-like sales grew by 1.2% in the quarter, driven by increased sales of electrical products, which offset small declines in categories, such as homewares and furniture. Revenue for the first half increased 2.9% in total to £1,769m.

Online sales grew in line with total sales in the quarter and accounted for 44% of total Argos sales, while an increase in gross margin by approximately 25 basis points was driven by a reduction of promotional sales.

Home Retail Group chief executive John Walden said of today's results: "The Group has had a good first half. Argos delivered its ninth consecutive quarter of positive like-for-like sales growth in the second quarter. For the first time in many years, this sales growth was supported by an improved gross margin performance.

"Homebase performed well over its peak trading period, following up its good performance in the first quarter with broadly flat like-for-like sales in the second quarter. This is especially pleasing given that we achieved this against a strong 11% like-for-like in the same period last year.

"At this halfway point of the financial year we expect to deliver full-year group benchmark profit in line with current market expectations, however, as always the full-year outcome will depend upon Argos' Christmas trading period."

Looking ahead, he concluded: "We remain cautiously optimistic about the broader economic environment. Key economic indicators seem to be improving, however retail spending in general has been inconsistent across both product categories and geographies, suggesting that there is not yet a sustainable, broad-based consumer recovery."