Carpetright, the UK’s biggest carpet seller, issued a profits warning yesterday and parted company with chief executive Darren Shapland.
The firm’s 71-year old founder, veteran retailer Lord Harris of Peckham, will take on a full-time executive role until a replacement is found.
The firm said Mr Shapland will step down from his role with immediate effect, to be replaced by non-executive chairman and major shareholder Lord Harris.
The group warned that as a result of a softer market in Britain and a further deterioration in the Netherlands, full-year profits are likely to be significantly below previous expectations.
Analysts were forecasting a 2013-14 pre-tax profit of £13m to £14.6m before yesterday’s trading update.
Lord Harris, a self-made millionaire, prominent education philanthropist and supporter of the Conservative Party, has been selling carpets for over half a century.
He had stepped down as Carpetright’s chief executive 17 months ago when he was succeeded by Mr Shapland, a former finance director of supermarket Sainsbury’s.
Mr Shapland oversaw a programme of store refurbishments, improved product ranges and increased digital marketing.
Until recently, like-for-like sales were on a positive trend, with annual profits more than double the previous year at £9.7m.
Graham Harris, currently Carpetright’s trading director, will join the board and become chief operating officer.
In the 10 weeks to September 29 like-for-like sales were down 2.5 per cent in the UK and down 7.6 per cent in the rest of Europe.
N+1 Singer analyst Matthew McEachran said the profits warning came as a “huge surprise”, particularly as a CBI survey said furniture and carpet retailers led the retail sector’s best month since June 2012.
He expects that city profit forecasts will fall to around £10m for this year, compared with £62m in 2008.
Lord Harris indicated that Mr Shapland left the company because he was not able to commit for a five-year term as previously thought.
“I am disappointed that Darren Shapland, who has made a significant contribution to Carpetright over the last 17 months, is leaving the business, but he does so with our thanks and we wish him well for the future,” he said.