Home Retail Group has posted a plunge in first-half profits and warned that the full-year figure will be at the low end of expectations unless trading conditions improve.

The parent company of Argos and Homebase reported a “benchmark” interim pre-tax profit down 19 per cent to£121 million on flat sales of£2.74 billion.

Like-for-likes fell by three per cent at Argos and 10.3 per cent at Homebase but since the end of the period on August 31, comparable store sales at both have “declined in percentage terms by high single digits”.

Home Retail chief executive Terry Duddy said: “The challenging conditions look set to remain for some time, and indeed have worsened in the turbulent recent weeks.

“If these conditions continue through our peak trading months of November and December, the profit outcome for the year would likely be around the bottom of current market expectations.”

The retailer wrote down£542 million against Homebase’s value, pushing the group into a reported operating loss of£450 million.

A “significant cost reduction programme” is under way at Homebase and there is likely to be only “a low single digit” number of new stores per year.

Argos will open about 25 shops this year and has been strengthening its range and focusing on value.

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