CATALOGUE retailing group GUS reported a sharp slowdown in growth at Argos over Christmas as competition intensified and UK retail demand waned.

Like-for-like sales at Argos rose one per cent in the 15 weeks to January 8 - down from seven per cent in the first half of its financial year.

GUS reported difficult markets for jewellery and toys, which contribute twice as many sales in the Christmas period compared to the rest of the year.

But strong performances from consumer electronics, white goods, mobile phones, leisure and photography products ensured underlying sales continued to grow.

Price cuts and promotional activity were used in the run-up to Christmas to enable Argos to outperform its market, with total sales rising six per cent in the 15 weeks to January 8.

GUS assured investors that enough savings had been wrung from the supply chain to ensure that margins stayed ahead of a year ago, while currency swings also helped.

In an update on third-quarter trading, GUS said each of its key businesses had delivered a positive result.

DIY chain Homebase overcame a slowing market to improve like-for-like sales by four per cent, with good performances from kitchens and bathrooms and new ranges in paint, tiling and lighting.