Pre-tax profits fell to £14.2m from £46.7m last year. Underlying profit was up 53 per cent to £27.4m.
Chief executive Terry Duddy said: "Argos and Homebase are making good progress with their investment plans, and remain on track to deliver their long term strategic objectives.
"As we look ahead to the second half of the year, we expect consumer spending will remain subdued, and whilst some macroeconomic indicators are improving, these have not yet led to an increase in household disposable income."
A surge in demand for garden furniture in the summer heatwave helped Homebase's like-for-like sales rise 5.9 per cent, marking the strongest growth since it was bought by Home Retail Group in 2002.