GUS, owner of the Homebase DIY stores and Argos catalogue chain, insisted yesterday that it would continue to take market share from its rivals during the current “retail recession”, which it said would last at least a year.

The company said that it expected another difficult Christmas but that Argos and Homebase would “outperform the market”. Despite falls in underlying sales, both chains continue to open stores and are gaining market share.

David Tyler, GUS’s group finance director, said: “When this consumer recession goes away we will be in a stronger position than ever. We have improved products and infrastructure and some of the competition will have come out of the market.”

However, shares in GUS slipped 12½p to 844p as Homebase’s underlying sales slumped by a worse-thanexpected 7 per cent in the three months to September 30, compared with a 2 per cent decline in the previous quarter.

Gross margins were ahead in the six-month period as a result of better buying from suppliers but Mr Tyler said that increased fixed costs, such as fuel and rent and the likelihood of increased promotional activity would affect profitability.

Homebase blamed poor sales of tools, building materials and seasonal gardening items for its sales decline, which was at a similar level to the slump at its major rival B&Q. However, Homebase reported a rise in sales of kitchens and furniture.

At Argos, underlying sales fell 3 per cent in the six months to September 30, implying an improvement in the second quarter as MP3 players, large kitchen electricals and toys sold well but jewellery and home furnishings sold poorly. Margins were steady but prices in the Argos catalogue will be 5 per cent lower than last year.

Mr Tyler said: “Last year wasn’t great and I don’t believe that the market is going to be that great this Christmas.”

Analysts said that the profits squeeze at the retail chains had been offset to some extent by a strong performance at Experian, GUS’s marketing and information services division.

Consensus profits forecasts for the year were cut by about £25 million, or 2.7 per cent, to about £880 million as Experian recorded its strongest rise in underlying growth.

CHECKING OUT

• June 2002: Burberry IPO, GUS has 75% stake
• May 2003: GUS Homeshopping sold
• Nov 2004: GUS sells 10% of Burberry stake
• May 2005: sale of final 50% stake in Lewis
• Nov 17: deadline for Burberry demerger detail

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