The boom in retail spending helped British catalogue chain Argos increase its Irish pre-tax profits by 42 per cent to €29.39 million in the year to March 2005, according to new accounts.

With no waning in sight to consumers' growing appetite for home improvement and technology, a post-tax profit of €23.95 million brought the profits accumulated by Argos in Ireland to €54.54 million.

The chain is a big beneficiary of a business model that enables it to increase its profit margins by using catalogues instead of in-store display and selling usually bulky goods in flat-packs.

Separately-filed accounts show that the chain's DIY and gardening affiliate Homebase House and Garden fared less well, with pretax profits dipping by more than €1 million to only €674,000 in the year to February 2005 in spite of rising sales.

Both chains are owned by the London-listed Great Universal Stores (GUS). Amid stiff competition and rising costs in the DIY market, GUS is likely to concentrate in the near-term on a big expansion of the Argos network.

The chain already has 26 stores in the Republic and a spokeswoman said this would rise to 40 by the end of 2009. The company employs only three staff in administration in Ireland but its store-based staff of 957 will rise by 500 as a result of this expansion.

Argos outlets will open in Drogheda, Co Louth, next month and in Tullamore, Co Offaly, in March. Argos and Homebase will open during the summer in Killarney, Co Kerry. This Homebase opening will bring to nine the number of its stores in the Republic.

The latest accounts for Argos Distributors (Ireland) Ltd show that its rising profitability was achieved on the back of a steep rise in sales to €214.04 million from €197.47 million and a tight rein on the cost of sales, which rose only by €1.21 million to €121.54 million in the same period.

The increase in operating profits to €28.39 million from €20.47 million implies a rise in operating profit margins to 13.24 per cent from 10.37 per cent. The accounts also imply tighter inventory management during the year with the value of goods for resale at the end of the accounting period falling to €16.99 million from €23.4 million a year earlier.

As in the previous financial year, GUS took no dividend from Argos in Ireland in the latest period. Neither did it take a dividend in 2005 or 2004 from Homebase, which took over the Texas Homecare chain in 1995.

While sales at Homebase rose to €32.47 million from €29.03 million, its operating profit fell to €597,000 from €1.77 million. This means its operating profit margin went down by more than four percentage points to only 1.83 per cent from 6.09 per cent.