Home Retail Group said yesterday it expected consumer spending to remain "subdued" this year after sales slowed at the Argos catalogue chain and higher promotions at Homebase led it to cut its profitability outlook for the unit.

Sales at Argos stores opened at least a year rose 1.9 per cent in the 13 weeks to June 1st, the retailer said yesterday. That was below consensus forecasts.

Finance director Richard Ashton said full-year margins at the Homebase home-improvement chain would narrow by 0.5 percentage point.

The retailer said last month it was more optimistic about the summer as it expanded online and mobile sales, added more products to its range like Habitat furniture. However, it said yesterday Homebase was “slightly behind our expectations” as cold weather hurt seasonal sales. – Bloomberg