14/01/2016 07:44 GMT | Updated 14/01/2017 05:12 GMT

Home Retail Group Warns Over Profits After Argos Sales Fall

Argos owner Home Retail Group has warned over profits after it said the chain suffered falling sales amid "mixed" trading over Christmas.

Home Retail - which on Wednesday night revealed talks to sell its DIY arm Homebase and rejected a takeover approach for the wider business from Sainsbury's in November - posted a 2.2% fall in sales at established Argos stores for the 18 weeks to January 2.

Despite a better performance from the Homebase chain, where like-for-like sales rose 5%, Home Retail said group underlying profits were expected to be at the bottom end of City expectations for the full-year.

John Walden, chief executive of Home Retail, said it had been a "very eventful" time for the group after it rebuffed the bid approach from Sainsbury's before Christmas and revealed advanced discussions over a £340 million sale of Homebase.

It said on Wednesday it was finalising sale documents for Homebase with Australian retail giant Wesfarmers after the pair opened negotiations in September.

Homebase has more than 270 stores, employs around 18,000 staff and turned over around £1.5 billion last year.

But the Christmas trading woes at Argos come at a bad time for Home Retail as Sainsbury's considers its next move in the takeover saga.

Home Retail said it expects group underlying profits to be at the bottom end of expectations for between £92 million and £118 million for the year to the end of February.

Mr Walden said trading at Argos was "mixed" as it was hit by uneven trading over the run-up to Christmas caused by the Black Friday promotional day in late November, as well as a slump in the number of shoppers on high streets and falling prices.

Sales on Black Friday leapt 41% higher in its busiest ever sales day.

But Mr Walden added: "Consumer enthusiasm for Black Friday resulted in sales shifts from both the weeks before and after the event.

"Furthermore, during December, Argos experienced a 13% reduction in traditional store walk-in sales, exacerbated in high-street and shopping centre stores."

Argos continued to see a fall in sales of electrical products, with tablets, video gaming and white goods the worst affected.

Toys and furniture sales rose, while sales in homewares and jewellery also fell.