The extent to which shoppers are holding off on non-essential purchases, from beds to garden equipment, was laid bare on Thursday as Home Retail Group said it was planning for an extremely difficult year.

Even though the company was on track to meet consensus profit forecasts of £320m ($446m) for the year to February, Terry Duddy, chief executive, said he expected forecasts for 2009-10 to fall below £200m as the owner of Argos and Homebase endured another year of falling sales and margins.