Homebase to post £40m profit, but Argos drags group down

Contrasting results for shops owned by Home Retail, as families improve rather than move home

Homebase, owned by Home Retail, is likely to report sparkling results this week as the public has stocked up on DIY items rather than moving house during the economic downturn.

City analysts expect the home improvement chain, which owns about 340 stores, to post a 168 per cent rise in operating profit to £40m for the year.

Sam Hart, a Charles Stanley retail analyst, said: "The introduction of an installation service, the exit of competitors like MFI and the 'don't move, improve' trend have all driven up sales."

However, a disastrous performance by the catalogue store Argos will drag pre-tax profits for the group to only £290m, a £38m dip on last year's number, said Mr Hart. Argos has struggled because of a downturn in demand for its game consoles and TVs.

Analysts are also playing down rumours that Home Retail could be a takeover target for Asda which has said that it plans to expand its non-food business. "We are sceptical of recent speculation that the group could be a target for Asda [or its owner] Walmart, given our belief that the latter will expand into non-food organically," said Mr Hart. Earnings per share are, however, expected to remain unchanged at 14.7p.

Beyond the first quarter, Deutsche bank predicts that Argos's downward

spiral will continue, while Homebase will prop up Home Retail's balance sheet. "For the full year, we forecast pre-tax profit of £293m. We forecast like-for-like sales to be down 0.5 per cent. At Homebase we forecast a like-for-like sales increase of 0.3 per cent."

Home Retail finished the week up 8.5p at 294.8p.

BP will report "excellent" numbers at its first quarter results on Tuesday, according to industry analysts.

Deutsche Bank predicts that profit for the first three months of the year will be in excess of $4bn (£2.6bn), down $15m from last year. "We expect first quarter results at BP to show excellent year-on-year progress as the company benefits from the strong increase in oil prices," said analyst Lucas Herrmann, adding: "The potential for income growth over the medium term means we retain our positive buy stance."

Deutsche expects BP to announce earnings per share of $0.25, up 82 per cent on last year.

Tony Hayward, BP's chief executive, will be under pressure to give details of last week's oil rig explosion in the Gulf of Mexico on Tuesday. Reports indicate that the well had stopped leaking by Friday evening. The US Coast Guard said that around 200 barrels of oil have leaked into the gulf. BP immediately dispatched more than 30 ships to contain the spill. BP finished the week up nearly 1p at 639.7p.