Interim Management Statement

Home Retail Group Plc
17 January 2008

                                                                 17 January 2008

                             Home Retail Group plc
                          Interim Management Statement

Home Retail Group, the UK's leading home and general merchandise retailer, today
publishes an Interim Management Statement covering the 18 weeks of 2 September
2007 to 5 January 2008.

Terry Duddy, Chief Executive of Home Retail Group, commented:

'The overall results for this important period are in line with our expectations
and we are on target for full year profit to be towards the upper end of market
forecasts. Argos' broad product mix, strong value credentials and multi-channel
leadership have shown clear strength over its peak trading period. Looking
forward, the anticipated consumer slowdown is now more evident and it is obvious
that sales growth in the short-term will be harder to come by. Despite facing
this increasingly challenging environment, we continue to believe that our
businesses are well positioned in their markets.'
                                                     
                                                       Latest               YTD
                                                  18 weeks to       44 weeks to
                                                    5 January         5 January
Argos
Sales                                                  £1,919m          £3,755m
Like-for-like change in sales                           (0.2%)             0.6%
Net new space contribution to sales change                2.7%             2.9%
Total sales change                                        2.5%             3.5%
Gross margin movement                                   c.0bps       Up c.50bps

Homebase
Sales                                                    £498m          £1,352m
Like-for-like change in sales                           (6.3%)           (3.9%)
Net new space contribution to sales change                2.2%             2.2%
Total sales change                                      (4.1%)           (1.7%)
Gross margin movement                              Up c.200bps      Up c.250bps
                                                     
Argos
Total sales at Argos grew by 2.5% to £1,919m in the 18 weeks to 5 January 2008.
Like-for-like sales were down 0.2%, while the positive contribution to sales
growth from net new space was 2.7%; a further seventeen new stores were added
and two were closed, taking the portfolio to 700.

The overall sales growth was led by exceptional performances in the video
gaming, 'satnav' and mobile phone categories. Strong growth continued in flat
panel TVs, while cameras and digital photo frames were also strong categories.
Sales were marginally negative in the more traditional gift areas of toys and
jewellery, while the furniture and homewares categories also became more
difficult. There was continued weakness in demand for older technology areas
such as the audio, VCR/DVD and landline phone categories.

The Internet as an order channel grew by one-third to account for 23% of all
Argos' sales. Internet 'Check & Reserve' orders for store collection accounted
for 15% of the 23%, growing by almost 50% and seeing nearly seven million
reservations collected over the period. Internet orders for home delivery
represented the other 8% of total Internet sales.

Gross margin was approximately flat against the same period last year. Ongoing
supply chain progress, together with foreign exchange benefits, offset an
increased level of investment in lower prices in the catalogue and a negative
product mix impact. There was also excellent cost productivity in the period,
albeit at a slightly lower rate than that achieved in the first half.

The new Argos catalogue launches this Saturday, 19 January. Similar to the
edition just ending it will have around 18,500 lines, representing an increase
of around 1,800 year-on-year. There are 10,400 lines available for immediate
collection in virtually all 700 stores, while half the store portfolio will
carry all or part of the additional 3,700 'Extra' lines. There will be an
overall price reduction on reincluded lines of approximately 4%, further
enhancing excellent customer value.

Homebase
Total sales at Homebase declined by 4.1% to £498m in the period. Like-for-like
sales were down 6.3%. The positive contribution to sales growth from net new
space was 2.2%; a further nine new stores were added and two were closed; in
addition, two of the 27 stores acquired from Focus were launched at the very end
of the period; the store portfolio as at 5 January 2008 was 320.

The level of overall sales decline was fairly consistent across the business
with the exception of the 'big ticket' category which saw overall positive
growth. The performance of this category was driven by continued strong growth
in kitchens, although sales of bathrooms saw a decline and furniture sales also
became more difficult.

Gross margin increased by approximately 200 basis points. This was a result of
ongoing supply chain progress, together with foreign exchange benefits.

Other
There have been no significant changes in the financial position of the Group
since the publication of the half-year results.

As previously announced, post the half-year balance sheet date a cash payment of
£40m was made to purchase 27 Focus DIY leasehold properties. Also in the second
half of the financial year, the Group has disposed of its 33% holding in AAGUS,
a consumer finance company in The Netherlands. The sale for a net consideration
of approximately £4m will result in a gain on disposal of approximately £3m,
which will be recognised within the share of post-tax results of associates
within benchmark PBT.

Enquiries

Analysts and investors (Home Retail Group)
Richard Ashton               Finance Director                     01908 600 291
Stuart Ford                  Head of Investor Relations

Media (Finsbury)
Rollo Head                                                        020 7251 3801

There will be a conference call for analysts and investors to discuss this
statement at 8.30am this morning. The call can be listened to live on the Home
Retail Group website www.homeretailgroup.com. An indexed replay will also be
available on the website later in the day.

Home Retail Group will announce details of trading for the remaining 8 weeks of
the current financial year (6 January 2008 to 1 March 2008) on Thursday
13 March 2008, and its full-year results on Wednesday 30 April 2008.

Information in this announcement is based upon unaudited management accounts. In
addition, certain statements made are forward looking statements. Such
statements are based on current expectations and are subject to a number of
risks and uncertainties that could cause actual events or results to differ
materially from any expected future events or results referred to in these
forward looking statements.



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