Sainsbury’s offer price for Home Retail beaten by a higher £1.4bn bid by South African retail group Steinhoff
Argos recorded its strongest rate of growth in eight quarters.Reuters

Catalogue retailer Argos made a strong start to the year, with sales increasing at the fastest pace in eight quarters in the first three months of the year, the group's owner, Home Retail, said on Thursday (9 June).

In the quarter to 28 May, sales at Argos totalled £868m (€1.10bn, $1.26bn), a 0.1% year-on-year increase on a like-for-like basis and a 2.6% gain from the corresponding period in 2015. Internet sales were the main driver behind the increase, with online sales jumping 16% year-on-year in the period and now accounting for 45% of total sales compared with 44% in the first quarter last year.

Among individual divisions, the electrical and non-electrical product categories delivered steady growth during the period, thanks to performance of TVs, mobiles, computers and tablets, partially offset by a sales decline in white goods.

The group added the growth in sales of non-electrical products was largely driven by furniture and general sports, although that was partially offset by weaker sales of seasonal products.

"Argos delivered good total sales growth together with positive like-for-like growth, representing its strongest sales growth performance in eight quarters," said group chief executive John Walden. "This was achieved against the challenging backdrop of constrained seasonal product sales due to poor weather, on top of a deflationary pricing environment."

Meanwhile, Home Retail confirmed Sainsbury's remains on track to complete its £1.2bn takeover of the business in the third quarter of the current financial year. Under the terms of the deal, Home Retail shareholders will receive 0.321 new Sainsbury's shares and 55p in cash as well as 25p per Home Retail share, reflecting the £200m return to shareholders in respect of the Homebase Sale as announced by the group on 18 January 2016.

Additionally, shareholders will receive a 2.8p per Home Retail share in lieu of a final dividend in respect of Home Retail's financial year, which ended on 27 February.