Floor coverings firm Carpetright has dealt a major blow to profit expectations after seeing little respite from grim trading conditions.
The group said like-for-like sales in the UK and Ireland fell 7.7% in the 13 weeks to January 29, a period covering December’s snow disruption but also easier comparisons with the freezing weather seen in January 2010.
Chairman and chief executive Lord Harris of Peckham said: “Although we have achieved an increase in sales year on year since Christmas, this has not been at the level expected. This causes us to remain cautious about the outlook for the remainder of the financial year.”
Carpetright warned that profits for the year to April will be below last year and lower than current market expectations of around £26.3 million, although still ahead of the £17 million achieved two years earlier.
Matthew McEachran, a retail analyst at Singer Capital Markets, said profits were now likely to be in the range of £19 million and £20 million in the absence of any improved demand trends before April – a 20% cut to City forecasts.
Carpetright shares were more than 8% lower after the update.
Lord Harris – a veteran of the retail sector with more than 50 years of experience – said adverse weather and fragile consumer confidence had made life difficult in the floor coverings market.
As well as January’s rise in VAT to 20%, Carpetright has seen sales of big-ticket, housing-related items impacted by a low level of mortgage approvals.
Lord Harris added that the business remained well placed to capitalise on opportunities when economic conditions improve.
Carpetright has 574 outlets in UK and Ireland and a further 120 in the Netherlands and Belgium.