The firm has reported its results for the 18 weeks from Sunday 30 August 2009 to Saturday 2 January 2010.
Total sales at Argos grew by 3.9 per cent to £1,922m. Net new space contributed 3.8 per cent with five new stores opening in the quarter, taking the portfolio to 744.
Like-for-like sales increased by 0.1 per cent in the period. The company reported an excellent performance in toys, as well as good growth in electrical goods.
Growth in these areas was substantially offset by the market weakness in video gaming, however.
The internet represented 35 per cent of Argos sales, up from 30 per cent a year earlier. Three-quarters of these sales were online Check & Reserve orders, which grew by 34 per cent.
The approximate 250 basis point gross margin decline was driven principally by the anticipated net impact of adverse currency movements, together with the sales mix impact and increased promotional activity.
Terry Duddy, chief executive of Home Retail Group, commented: “Argos has performed ahead of our plans in its most important trading period, and Homebase trading has continued to be strong.
"There was also further excellent cost management across both businesses. We now expect group benchmark profit before tax for this financial year to be about £20m ahead of the current market consensus of £265m.
“Due to the uncertain economic outlook, we expect trading for the next financial year to remain challenging. We will plan accordingly from a position of continued operational and financial strength.”