Interim Management Statement

Home Retail Group Plc
14 June 2007

                                                                    14 June 2007

                             Home Retail Group plc
                          Interim Management Statement

Home Retail Group, the UK's leading home and general merchandise retailer, is
today publishing its first Interim Management Statement as required by the FSA's
disclosure and transparency rules. The statement relates to the first 13 weeks
of the new financial year, representing the period 4 March 2007 to 2 June 2007.


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


'We have had a strong start to the financial year in a highly competitive
market. Homebase has seen good sales growth in its peak season to date, while
Argos achieved like-for-like sales growth against a highly successful period
last year. Gains in gross margin were achieved in the quarter, with both
businesses benefiting from group sourcing. We remain cautious given the
uncertain consumer outlook and our expectations for the full year are unchanged
at this early stage.'


% change in sales year-on-year                                        13 weeks
                                                                     to 2 June
Argos
Sales                                                                   £893m
Like-for-like change in sales                                            0.9%
Net new space contribution to sales change                               3.6%
Total sales change                                                       4.5%
Gross margin movement                                              Up c.150bps

Homebase
Sales                                                                   £463m
Like-for-like change in sales                                            2.7%
Net new space contribution to sales change                               2.5%
Total sales change                                                       5.2%
Gross margin movement                                              Up c.300bps



Argos
Total sales at Argos grew by 4.5% to £893m in the first 13 weeks of the
financial year. The contribution to sales growth from net new space was 3.6%;
three stores were added to reach 683 as at 2 June 2007. The like-for-like sales
increase of 0.9% was driven by further strong growth in flat panel TVs and video
games systems, with seasonal categories also seeing good performances. Weaker
categories included audio, VCR/DVD and landline phones. Total Internet orders
grew by 29% and represented 18% of total sales, around half of which were
reserved for in-store collection. Home delivery overall grew to represent 25% of
total sales.


Gross margin was ahead by approximately 150 basis points, even after prices on
reincluded lines were approximately 3% lower. The gross margin gain was driven
by ongoing supply chain initiatives and foreign exchange benefits. It is
anticipated that there will be an even greater level of investment in lower
prices for customers during the peak trading period, which we expect will lessen
the gross margin gain for the full year.


Homebase
Total sales at Homebase grew by 5.2% to £463m. The contribution to sales growth
from net new space was 2.5%; there were two store openings and one closure
during the period, taking the store portfolio to 311. The like-for-like growth
was 2.7% for the period overall, with strongly positive sales growth achieved in
March and April that then reversed significantly in May. The performance in the
earlier part of the period was driven by the benefit of warm weather on sales of
seasonal categories, with trading then becoming more difficult during the latter
weeks of the period. Kitchen sales continued to have good growth.


Gross margin increased approximately 300 basis points, driven by ongoing supply
chain initiatives, foreign exchange benefits and a lower amount of clearance
activity in seasonal categories. This level of gross margin gain is likely to
lessen through the remainder of the year.



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 13 weeks of
3 June 2007 to 1 September 2007 on Wednesday 12 September 2007, and its half
year results on Wednesday 24 October 2007.


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




                      This information is provided by RNS
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