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Home Retail Group showed the upside to the financial crisis today as it indicated it is benefiting from the collapse of various High Street rivals.
The giant retailer behind Argos and Homebase has seen a jump in sales of toys and kitchenware.
That suggests it has picked up business from customers who would previously have spent money at Woolworths and MFI.
Its share of electrical goods such as TVs and DVDs is also on the increase as DSG, which owns Curry's, struggles to reorganise after several years in the mire.
Sales at Homebase are up 5.8% to £465 million in the 13 weeks to the end of May as good weather saw people stock up on barbecue kit and gardening products.
Even Argos, which was expected to take longer to shake-off the effects of the recession, saw sales up nearly 1% to £937 million.
Although the numbers are fresh evidence that the downturn is over, Home Retail chief executive Terry Duddy remains cautious.
“Sales are ahead of expectations. We are very pleased with the performance and of course we will take the upside, but these are still uncertain times,” he said.
“At this early stage of the financial year we continue to plan cautiously.”
Duddy says his focus remains on improving margins and cutting costs — moves that he hopes will position Home Retail to do well when economic recovery is confirmed.
However, he warned that “adverse currency movements” will hit the group's profits due to the higher costs of buying raw materials from abroad with a falling pound.
Manoj Ladwa at ETX Capital said: “The market will be encouraged by positive like-for-like sales for Homebase and better than expected numbers from Argos.
“Their strategy to cautiously expand could put them in a much stronger position on any economic turnaround.”
Homebase's arch rival B&Q recently reported surging sales thanks to the good summer weather. Some analysts expect that Homebase will lose market share to B&Q over the summer months.
The shares held steady in a falling market, slipping 1p to 265p.
That leaves the company valued at £2.3 billion. The stock is up by a third since January but well down on the 460p it reached two summers ago.
In April Home Retail unveiled annual results showing an accounting loss of £402 million due to goodwill write-offs of £694 million.
