Q3 Trading Update

Home Retail Group Plc
17 January 2007

17 January 2007

                             Home Retail Group plc

                               Q3 Trading Update


Home Retail Group, the UK's leading home and general merchandise retailer, today
announces details on trading for the 14 weeks to 6 January 2007.

Terry Duddy, Chief Executive Officer of Home Retail Group, said:

'Our trading approach in the period reflected an expectation of the general
merchandise market becoming more difficult. A less promotional stance, together
with good operational control, proved successful in a market that showed little
or no growth until just before Christmas. We expect profits for the full year at
both Argos and Homebase to be around the top of analyst expectations. Looking
forward, the retail environment is likely to remain challenging and we continue
to position our businesses accordingly.'


% change in sales year-on-year                               Q3         Year to
                                                                           Date

Argos
Like-for-like change in sales                               0.2             2.3
Net new space contribution to sales change                  4.1             5.7
Total sales change                                          4.3             8.0

Homebase
Like-for-like change in sales                             (2.9)           (2.8)
Net new space contribution to sales change                  2.7             3.6
Total sales change                                        (0.2)             0.8


Argos
Argos grew its total sales by 4.3% in the quarter, of which new space
contributed 4.1%. There were eight new stores opened in the period, bringing the
total to 681.

There was good growth in electrical goods overall. This was driven by further
strong sales of televisions and video game systems, partially offset by weaker
performances in other electrical goods categories. Jewellery, which has a higher
sales mix in the third quarter, continued to be weak.

Argos' multi-channel leadership continues to build. Total Internet sales grew
37% in the quarter and represented 19% of total sales. Of this, 11% of total
sales were Internet reservations that were collected in store, with the
remaining 8% being Internet orders for home delivery.

Gross margin was slightly ahead of last year. A negative product mix impact was
more than offset by continued supply chain gains and a less promotional stance.

Homebase
Homebase's total sales declined by 0.2% in the quarter. The contribution to
sales growth from net new space was 2.7%, with a net two new stores opened in
the period to bring the total to 307.


The planned reduced level of promotional activity, together with tough
comparables, resulted in lower big ticket sales compared to a year ago.
Offsetting much of the decline were good performances from housewares categories
including lighting, as well as from home security, paint and flooring.


Gross margin was strongly ahead of last year. This was driven by further
benefits from supply chain initiatives, together with the planned lower
promotional activity.



Enquiries


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


Press (Finsbury)
Rollo Head                                          020 7251 3801
Alice Macandrew


There will be a conference call for analysts and investors to discuss this
update at 7.30am 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's next trading update will be on 14 March 2007, reporting the
remaining eight week period to 3 March 2007. This is Home Retail Group's new
year end, as previously announced. Restated sales and profits for the 52 weeks
to 4 March 2006 will also be provided at the time of the trading update.


Certain statements made in this announcement 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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