Home Retail Group has released a second quarter trading update covering the 13 weeks to 29 August.

The company had previously warned the market to expect a challenging first half, and the performance was largely as anticipated, although toy sales were said to be strong.

Argos sales declined by 0.4% to £897m in Q2. Net new space contributed 2.4% with like-for-like sales down by 2.8%, albeit this was an improvement on Q1 when like-for-like sales were down by 3.9%. Sales of electrical products continued to decline principally driven by TVs, tablets and white goods, however the performance of the toy category was singled out for praise. Gross margins improved by 125 basis points, mainly due to favourable currency movements and lower shipping costs.

John Walden, chief executive of Home Retail Group, commented: “The outcome for the Group’s full-year generally depends upon the important Christmas trading period at Argos which, this year, seems less predictable than usual due to a less certain promotional environment. Our teams have made solid progress preparing for this period, including substantially completing the technology and operational steps necessary to introduce new store collection and home delivery propositions to our customers. We will be making increased marketing and promotional investments to launch these propositions and we expect customers to increasingly embrace them over time.”