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* Q4 Argos lfl up 5.2 pct, Homebase down 1.5 pct
* Raises 2012/13 FY profit to 90 mln stg
* Shares rise as much as 15 pct
By Neil Maidment
LONDON, March 14 (Reuters) - Home Retail, Britain'sbiggest household goods retailer, posted a sales surge at Argosand upgraded its annual profit forecast for the second time in2013, sending its shares soaring.
The group, which in January raised its full year profitforecast by 10 million pounds to 83 million, said it now expectspretax profit to be around 90 million pounds ($134 million)after fourth-quarter underlying sales at Argos rose 5.2 percent.
That strong performance in the 8 weeks to March 2 was drivenby demand for tablets and electrical goods, and came in wellahead of analysts' consensus for a 2.1 percent rise, promptingshares in the group to rise 15 percent in early trading onThursday, before falling back slightly.
"This has been a good outcome to a challenging year," HomeRetail Chief Executive Terry Duddy said.
Like many British retailers, Home Retail Group has felt thepressure of consumers being squeezed by higher prices and mutedwage growth, with Argos also facing big competition from onlinerivals and supermarkets.
The improvement was Argos' third consecutive quarter ofpositive like-for-like growth and comes as the group tries toreposition it from a catalogue-led business to a digital one tohelp reverse a slump in profit that has tumbled from 376 millionpounds to less than 100 million since 2008.
The group's turnaround plan is aimed at growing Argos' salesby 15 percent to 4.5 billion pounds by 2018 by focusing ononline, mobile and tablet transactions to attract shoppers.
Shares in the group, which have risen 40 percent in sixmonths, were up 11 percent to 147.7 pence at 1006 GMT.
CAUTION
Hargreaves Lansdown analyst Keith Bowman was upbeat butcautioned not all analysts were convinced about a recovery.
"The turnaround appears to be gaining traction...nonetheless, with the recovery still in its infancy and theoutlook for the consumer still highly challenged, analysts haveremained sceptical. It may still be too early to become anoutright optimist," he said.
Internet sales rose from 40 percent to 43 percent of salesin Argos' fourth quarter, with sales via mobiles up 117 percent.
Total sales for the 52 weeks to March 2 were around 3.9billion pounds, with underlying sales up 2.1 percent - a ratethe group said it expected to remain the same in 2013/14.
At the company's Homebase division, Britain's No. 2 homeimprovement retailer, fourth quarter underlying sales fell 1.5percent, better than analysts' consensus for a 2.8 percent fall,while margins also improved.
The chain has struggled as constrained consumer financesspell delays for DIY projects, a scenario also reflected at theUK's No.1 home improvements retailer, B&Q, which posteda 6.4 percent fall in fourth-quarter sales last month.
Total sales for the year at Homebase were around 1.4 billionpounds, with underlying sales down 4.9 percent. The group saidit saw like-for-like sales improving to flat in 2013/14.
