By Marcus Leach

Home Retail Group (HRG), the owners of both Argos and Homebase, have reported that they will significantly cut this year's dividend.

This news comes on the back of poor sales over the Christmas period for HRG.

At Argos, like-for-like sales - which strip out the effect of store openings - were down 8.8% in the last 18 weeks of 2011.

Whilst at Homebase, weak demand for big ticket items dragged like-for-like sales down 2.6% - steeper than the 1.3% rate recorded over the last 44 weeks.

"In a trading environment that has been both volatile and demanding, Homebase has again seen more resilient sales," Terry Duddy, Chief Executive of Home Retail Group, commented.

"Argos sales continue to be impacted by the market decline in consumer electronics categories, however we saw internet penetration reach over 40% of total sales, with Check & Reserve being boosted by the development of mobile commerce as customers embrace our leading multi-channel proposition.

"We have managed the business tightly over the peak trading period and expect Group benchmark profit before tax for this financial year to be around the mid-point of the current analyst range of £78-£125m.

"We will continue to plan cautiously with an ongoing focus on managing robustly both the cost base and the cash position of the Group while prioritising our investment in the ongoing development of our multi-channel capabilities."

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