Trading Statement

Home Retail Group Plc
12 September 2007


                                                               12 September 2007
                             Home Retail Group plc

                        Second Quarter Trading Statement

Home Retail Group, the UK's leading home and general merchandise retailer, today
publishes an update on trading in its second financial quarter and the first
half overall.

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

'We are pleased to report positive like-for-like growth at Argos against strong
comparatives last year. At Homebase however, there was a reversal in
like-for-like growth as the weather conditions impacted its seasonal categories.
For the first half overall, further progress on gross margins and continued cost
control is expected to see profits at Homebase ahead of last year and strong
growth at Argos. While we therefore expect a good first half profit result
across the group, the uncertain consumer outlook means we must remain cautious
at this stage in the financial year.'

                                                      ----------
                                              Q1              Q2              H1
                                     13 weeks to     13 weeks to     26 weeks to
                                          2 June     1 September     1 September
Argos
Sales                                     £893m           £942m         £1,835m
Like-for-like change in sales              0.9%            1.8%            1.4%
Net new space contribution to sales
change                                     3.6%            3.0%            3.3%
Total sales change                         4.5%            4.8%            4.7%
Gross margin movement               Up c.150bps      Up c.100bps     Up c.125bps

Homebase
Sales                                     £463m           £391m           £854m
Like-for-like change in sales              2.7%           (8.0%)          (2.5%)
Net new space contribution to sales
change                                     2.5%            1.8%            2.2%
Total sales change                         5.2%           (6.2%)          (0.3%)
Gross margin movement               Up c.300bps      Up c.300bps     Up c.300bps
                                                      ----------

Argos

Total sales at Argos grew by 4.8% to £942m in the second quarter of the
financial year. The contribution to sales growth from net new space was 3.0%; a
further five new stores were added, three were closed and one was relocated to
reach 685. The like-for-like sales increase of 1.8% was driven by further strong
growth in flat panel TVs and video games systems. Good growth in 'satnav' and
mobile phones offset continued weakness in landline phones and audio categories,
while seasonal-related products declined due to the adverse weather conditions.
Check & Reserve grew by 24% to represent 12% of sales, with a further 23% of
sales being home delivery orders placed either in-store or remotely.

Gross margin was ahead by approximately 100 basis points, driven by ongoing
supply chain initiatives and foreign exchange benefits. There was a higher level
of distribution costs as a result of the increase in overseas sourcing. Gross
margin gains for the full year are still expected to lessen due to a greater
level of investment in lower prices.

The new Argos catalogue, launched on 28 July, includes an overall price
reduction on reincluded lines of approximately 5%, greater than the 3% of the
previous Spring/Summer edition. It also provides the biggest ever choice with
18,100 lines, nearly 1,500 more than a year before. Virtually all stores
stock-in the core range of 10,500 lines for immediate collection, with a further
3,700 being Argos 'Extra' lines and 3,900 representing home delivery-only lines.

Homebase

Total sales at Homebase declined by 6.2% to £391m in the second quarter of the
financial year. The contribution to sales from net new space was 1.8%; there
were two new store openings, two closures and two relocations during the period,
leaving the store portfolio at 311. The adverse weather conditions during most
of the quarter led to a 20% decline in seasonal-related categories. These
categories normally account for approximately one third of second quarter sales,
thereby driving the overall 8.0% like-for-like sales decline. Non-seasonal
categories were generally stable, with kitchen sales continuing to see good
growth.

Gross margin increased by approximately 300 basis points, driven principally by
ongoing supply chain initiatives and foreign exchange benefits. Clearance
activity has been less than expected, as seasonal lines where appropriate have
been held over to next year.

As stated at the time of the demerger, Homebase would be moving one of its
distribution centres. This has now been successfully achieved, resulting in
one-off distribution costs being incurred. A one-off benefit in the quarter from
store-related property transactions approximately offsets the costs of the
distribution centre move.


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 its half-year results on Wednesday
24 October 2007. An Interim Management Statement covering the 18 weeks of
2 September 2007 to 5 January 2008 will be announced on Thursday 17 January
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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