Total sales at Argos grew by 0.9 percent to £937 million ($1.5 billion) with like-for-like sales down by 2.8 percent in the quarter. The retailer said that growth came from consumer electronics as a whole, and toy sales were strongly ahead—as a result of the demise of Woolworths. Home Retail bought the Woolworths' name at the beginning of this year. The furniture and homewares markets continued to be challenging for Argos.

"Argos and Homebase each enjoyed better-than-expected sales in the quarter and grew market share," says Terry Duddy, chief executive officer of Home Retail Group. "Homebase, in particular, saw its performance in gardening and outdoor products benefit from the excellent weather conditions. At this early stage of the financial year we continue to plan cautiously, with our trading focus remaining on driving cash gross margin and achieving further cost efficiencies."

The business expects that the impact of adverse currency movements on the gross margin rate will increase through the course of this year.