UPDATE 1-Argos owner sees profits rise as turnaround push shows promise

Wed Apr 30, 2014 3:47am EDT

* FY underlying pretax 115.4 mln stg vs f'cast 112 mln

* Sales at Argos stores open more than a year up 3.3 pct

* To pay final div of 2.3p, raising FY payout 10 pct to 3.3p

* Shares broadly flat in early trade at 206p (Adds details)

By Neil Maidment

LONDON, April 30 (Reuters) - Home Retail Group Plc, Britain's biggest household goods retailer, posted a 27 percent rise in full-year profit as a digital push at its Argos chain and a revamp at Homebase start to bear fruit.

After tough trading during the economic downturn, in which underlying pretax profit shrank to 91 million pounds in fiscal 2013 from 433 million five years before, the group began implementing a turnaround plan last year aimed at pushing Argos sales up 15 percent to 4.5 billion pounds by 2018.

Argos, which makes around 70 percent of group revenue, is being reinvented from a catalogue firm to a digitally-led business, targeting higher sales from tablet computers and mobile phones and hoping to cash in on easy collection from its 734 stores.

The group is improving its order retrieval systems and speeding up collections and will also trial some Argos stores this year within Homebase home improvement outlets, where business is benefiting from Britain's improving housing market.

The company said on Wednesday underlying pretax profit for the year to March 1 rose to 115.4 million pounds ($194.4 million), slightly ahead of analyst forecasts averaging 112 million, on total sales up 3 percent to 5.7 billion.

Sales at Argos stores open for more than a year rose 3.3 percent, led by strong demand for TVs, games consoles and tablets, and grew 5.9 percent at Homebase, thanks to higher sales of big-ticket items like kitchens.

Internet sales for the full-year rose 2 percent to 44 percent of total Argos sales, led by 89 percent growth in those made via mobiles and tablets.

Shares in Home Retail, which named Argos boss John Walden as its new chief executive in January, were broadly flat in early trading at 206 pence, having risen 32 percent on a year ago.

The group said it would pay a final dividend of 2.3 pence per share, raising its full-year payout 10 percent to 3.3p.

($1 = 0.5936 British Pounds) (Editing by Kate Holton and David Holmes)

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