Revenue for the Home Retail Group for the year to 1st March 2008 rose to £5.98bn from £5.85bn a year earlier.
Revenue from Argos increased to £4.32bn from £4.16bn, with like-for-like sales up by 0.7 per cent, sales at Homebase dipped to £1.57bn from £1.59bn.
Operating profit was up 11 per cent to £398m, with the £39m improvement comprising a £51m or 16 per cent increase to a record level at Argos and an £8m or 16 per cent decline at Homebase; Financial Services increased £1m and costs of Central Activities were £5m higher.
Terry Duddy, chief executive of the group, said: "Record profits have been achieved at Argos, and Homebase has traded relatively well in more difficult market conditions. As we head into a weakening consumer environment, we believe that the Group is well positioned both operationally and financially, and has a clear strategy to deliver long-term growth."