Home Retail year profit at top end of forecasts

LONDON, May 2 (Reuters) Britain's Home Retail Group Plc posted annual profit at the top end of forecasts on Wednesday and said it was confident of making further progress this year despite challenging conditions for consumer spending.

Britain's biggest household goods retailer, which runs catalogue-based Argos stores and the Homebase do-it-yourself chain, said it made a profit before tax, goodwill and one-off items of 376.7 million pounds (4.2 million) in the year ended March 3.

Analysts' average forecast was 371 million pounds, with a range of 361 million to 378 million, according to a Reuters Estimates poll of 12 brokerages.

A 2.4 percent rise in like-for-like sales at Argos more than offset a 1.4 percent decline at Homebase. Total sales for the group rose 6 percent to 5.85 billion pounds.

''The group has performed strongly for the financial year just completed. However, we remain cautious on a retail environment that is still expected to be challenging,'' Home Retail said in a statement.

''In addition, comparatives for the retail market as a whole, and particularly Argos, become tougher as we start to face last year's positive impacts of the World Cup as well as certain other product categories that boosted the first and particularly second financial quarters last year.'' Argos sells over 17,000 items from more than 650 shops, set out in twice-yearly catalogues which the company estimates adorn coffee tables in around two thirds of British households.

Homebase is Britain's second-biggest home improvements chain, behind Kingfisher Plc's B&Q.

The firm proposed a final dividend of 9 pence a share, making a total full-year payout of 13 pence.

Home Retail was spun out of the conglomerate GUS in October, with its shares debuting at 420 pence. The stock has outperformed the UK retail sector by about 5 percent since then and closed on Tuesday at 456 pence, valuing the business at about 4 billion pounds.

REUTERS SR BD1226