Argos, the chain at the centre of a bidding war, said the pace of sales declines halved as its overhaul remains on track.
Parent company Home Retail said like-for-like sales fell 1.1% in the eight weeks to February 27, compared to a fall of 2.2% in the previous quarter.
Home Retail CEO John Walden called the last few weeks an “eventful period”, which saw it sell off its DIY chain Homebase to Australian conglomerate Wesfarmers for £340 million in February.
The remaining part of the group, Argos, is at the centre of a bid battle between Sainsbury’s and South African-based retailer Steinhoff.
Last month Sainsbury’s had a £1.3 billion bid for Home Retail trumped by Steinhoff’s £1.4bn offer.
Steinhoff - which owns UK furniture retailer Harveys - is listed on the Frankfurt and South African stock markets.
Sainsbury’s said last month a combination with Home Retail would create a ‘’world-leading’’ retailer bigger than rivals John Lewis and Amazon UK. Both suitors have until March 18 to formalise their offers.
Home Retail said total sales at Argos rose 1.9% to £515m in the eight-week period, as demand for furniture and sports goods offset lower sales of electrical goods, such as video games and tablet computers.
The group said Argos opened 90 new stores over the year, bringing its estate up to 845. It added this expansion impacted its like-for-like sales over the period and that it expected to meet City profit forecasts of £93m.
Mr Walden said: “I am pleased with the continued improvement in Argos’ sales performance in the period, together with the continued progress in the Argos transformation plan to become a digital retail leader.”