Household goods retailer Home Retail delivered a weaker than expected finish to the year at both its Argos and Homebase chains.
But it said that cost controls and improvements to its margin had helped the bottom line.
The group said it expected pre-tax profit for the year to beat the top end of market forecasts of £120-132m. Analysts on average expected £123m, according to Reuters data.
The company said like-for-like sales at its bigger Argos chain fell 5% in the eight weeks to the end of February, falling far short of forecasts of a 0.2% fall, reflecting poor demand for consumer electronic products.
Sales at its Homebase DIY chain on the same measure also disappointed, dropping by 0.9% compared to predictions for a rise of 0.4%.