GUS PROFITS RISE BY 20%.

Byline: NEIL HODGSON 

CATALOGUES and retail giant Great Universal Stores today unveiled better than expected interim profits and a pounds 900m deal for Homebase.

The group owns Argos and Burberry and employs about 1,000 staff at a Widnes call centre under the Reality banner.

Chief executive John Pearce announced that profits for the six months to September 30 leapt 20% to pounds 247m compared with forecasts of between pounds 230m-pounds 236m. Turnover rose 6% to pounds 3.04bn.

The boost was due to pre-Christmas activity at Argos and an improved performance from its US-based credit checking business. When including a pounds 139m one-off profit from the flotation of the upmarket Burberry chain this summer, bottom-line profits soared to pounds 328.8m from pounds 131.6m last time.

The group is also expanding the 502strong Argos chain and is aiming to open 35 stores a year.

Mr Pearce also revealed an agreement to buy home improvement chain Homebase for pounds 900m, which is worth pounds 139m to supermarket giant Sainsbury's for its 17.3% stake in Homebase.

``For the last three years, we have been repositioning our portfolio of businesses to focus on growth. The acquisition of Homebase is a further example of our determination to create shareholder value,'' said Mr Pearce.

He added that the store opening programme for Homebase, which employs 17,000 staff and is the UK's third largest DIY retailer, would be accelerated, including a move into home furnishings.

Private equity group Permira bought Homebase from Sainsbury's for pounds 750m two years ago and increased trading profit threefold.