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Shares boost for Home Retail Group as Argos reports strong Christmas sales

A STRONG festive performance by under-pressure catalogue retailer Argos yesterday sent shares in owner Home Retail Group up 12.4% even as its DIY-arm Homebase struggled.

Meanwhile, Dixons Retail, owner of Currys and PC World, benefited from "phenomenal" demand for tablet computers and the collapse of rival Comet.

Children's store Mothercare, however, turned in another poor performance.

Argos, which has 66 stores in Scotland, appears to have benefited from the growing enthusiasm for click-and-collect shopping whereby customers order items online then pick them up from a store.

It posted a 2.7% rise in like-for-like sales in the 18 weeks to January 5. City analysts had expected a 0.2% improvement.

Internet sales now represent 42% of Argos's total sales. Within this, sales from mobile devices rose 125%.

Underlying sales in the period at Homebase, which has 41 stores in Scotland, fell 3.9% – worse than the 2.1% decline forecast by analysts – as shoppers stayed away from big ticket purchases.

After telling investors its annual pre-tax profit would be £10 million ahead of current market consensus at £73m, Home Retail Group's shares closed up 15.1p at 136.6p. They have risen 49% in the last year.

But some remain sceptical.

Ross Bailey, director of retail consultancy Appear Here, said Argos's shares came at the price of profit margin. He added: "Propped up at the bar in the last-chance saloon, Homebase's demise is looking as assured as a New Year's Day hangover."

Dixons said its like-for-like sales in the UK and Ireland were up 8% in the 12 weeks to January 5, despite administrators for Comet holding a clearance sale for most of the period.

Dixons has 44 stores in Scotland, most of them operating both the Currys and PC World brands. It sold more than one million tablet computers in the UK and Ireland over the period. Five were sold every second in the week before Christmas.

Chief executive Sebastian James said: "Tablet sales were phenomenal across our markets, which was good to see but which impacted overall headline margins somewhat."

Margins were down 0.5% in the period, because the mark-up on tablet computers is lower than on laptops.

Dixons said it expected underlying profits for the year to be in line with market expectations of between £75m and £85m. Its shares closed up 0.14p at 27.25p.

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: "The gulf on the high street between the haves and have-nots is becoming increasingly evident. Within this mix, Dixons is another Christmas winner."

Baby and maternity products retailer Mothercare posted a 7.4% fall in third quarter total group sales, despite seeking to cut prices and improve stores and delivery services.

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