Thursday 22 March 2018

Carpetright issues profit warning on 'sharp deterioration' in trade

Carpetright results
Carpetright results Business Desk Business Desk

Carpetright warned on full-year profit on Friday, saying sales in the key post-Christmas period were significantly below expectations.

Carpetright's fortunes are closely tied to the strength of the UK housing market and the firm is regarded as a useful economic indicator as traditionally it has been "first in, first out" of a recession.

The warning from Britain's biggest floor coverings retailer adds to evidence that UK consumers, under pressure from slow wage growth, compounded by higher inflation in the wake of the 2016 referendum vote to leave the EU, are tightening their belts.

Company trading updates and survey data published this month have shown Britons cut back on almost everything other than food purchases in the run-up to Christmas.

Carpetright, which trades from 416 UK stores, said like-for-like sales in its home market fell 3.6pc in the 11 weeks to Jan. 13.

Like-for-like sales in the core flooring category fell 7.1pc in the post-Christmas period.

It said UK trading was impacted by lower customer footfall, with transaction numbers down significantly year-on-year.

"While average transaction values were up year on year, the number of customer transactions since Christmas was sharply down, which we believe is indicative of reduced consumer confidence," said Chief Executive Wilf Walsh.

Carpetright slashed its full 2017-18 year underlying pretax profit guidance to a range of £2m to £6m. Previously analysts' average forecast was $14.1m.

The firm made $14.4m in 2016-17.

Shares in Carpetright, down 6pc so far this year, closed Thursday at 164.5 pence, valuing the business at £112m.


Business Newsletter

Read the leading stories from the world of Business.

Also in Business