Turnover at the DIY/gardening chain fell 10.2% on a like-for-like basis to £684 million in the 26 weeks to 28 February, with the gardening business putting in a particularly poor showing.
Total sales at 345-store Homebase declined by 5.5% to £205 million in the eight weeks to 28 February.
The company said: "Garden maintenance and horticulture areas saw particularly difficult trading conditions. Most other product categories reflected the challenging market environment already experienced for a number of quarters."
But owner Home Retail Group said full-year profits will meet expectations as a better-than-expected performance at Argos offset a fall of more than 10% in sales at its DIY and gardening business.
Chief executive Terry Duddy said: "The environment for the new financial year will be extremely challenging."
Duddy confirmed the group will be cutting staff including 300 from its head office, while it will fold the group's interiors magazine IDEAS.
The group said the measures would lead to an exceptional charge of £35 million.
Finance Director Richard Ashton said he expects the home-improvement market to remain "extremely challenging" and reconfirmed a forecast for pre-tax profit this year to meet market expectations of £320 million, a 26% decline.
The company has cut 300 jobs this year and closed two warehouses to reduce costs. Net cash is estimated to be £100 million higher than last year and is "sufficient" to meet the company's needs, Home Retail Group said.