Home Retail profit at top of range

By Mike Elliott

LONDON (Reuters) - Argos stores owner Home Retail Group (HOME.L) reported full-year profits at the top end of analysts' forecasts, boosting its shares, but reiterated that the outlook for consumer spending was weaker this year.

The country's biggest household goods retailer posted pretax profit before goodwill and one-off items of 433 million pounds in the year to March 1, up from 376.7 million last year and compared with analysts' consensus forecast for 428.5 million pounds, with forecasts ranging from 415 million to 433 million, according to Reuters Estimates.

The company, which also runs the Homebase home improvements chain, said sales rose 2.3 percent to 5.99 billion pounds.

"Record profits have been achieved at Argos, and Homebase has traded relatively well in more difficult market conditions," Chief Executive Terry Duddy said in a statement.

"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."

Home Retail shares, which have underperformed the UK general retailers index .FTASX5370 by 6 percent in the past 12 months, were up 5.1 percent at 255 pence at 9:20 a.m. BST, outpacing the DJ Stoxx European retail index .SXRP, which was up 0.3 percent.

"Cost and margin control in a tough trading environment saw Home Retail Group deliver at the top end of expectations, and although the outlook remains tough, we see the company as better placed than most retailers," Panmure Gordon analysts said in a note, adding that the stock was undervalued.

"In a tough consumer outlook, we continue to believe that the company's combination of range, value and convenience confers defensive qualities lacking in many competitors," they said, reiterating a "Buy" rating and 350p price target.