The owner of Argos has warned over full-year profits after first half earnings nearly halved at the high street chain amid weak demand for televisions and tablet computers and hefty start-up costs for its same-day delivery service.
Operating profits at Argos dropped 47% to £6.4m in the six months to August 29, with like-for-like sales down 3.4%.
Parent firm Home Retail Group said its DIY business Homebase enjoyed a better start to the year, with earnings up 23% to £34.3m after decent summer sales and cost savings.
This helped group underlying pre-tax profits rise 10% to £34.1m in the first half, but chief executive John Walden said the overall performance was "mixed".
Home Retail hopes for a pick-up in sales at Argos over the second half, but cautioned the "challenging" trading, costs of its Fast Track delivery service and an unpredictable Christmas were likely to see annual profits fall "slightly" short of City expectations.
The market is currently pencilling in group profits of £115m to £140m, against £132.1m the previous year.
"We look forward to an improved sales performance for both Argos and the group in the second half," Mr Walden said.
"However, as I have previously stated, trading at Argos during this year's important Christmas season seems less predictable than usual, as both retailers and customers determine whether to repeat last year's unusual Black Friday patterns," he added.