Carpetright feels the spending squeeze as group slips to first-half loss

The country’s largest floor-covering retailer Carpetright slid to a first-half loss yesterday as the consumer spending squeeze took its toll.

The retailer, which operates 503 stores in the UK, recorded a bottom-line loss of £800,000 in the 26 weeks to October 29, compared to profits of £9.8m in the same period the previous year.

Profit margins fell by 4.3 percentage points as it put on more promotions amid “volatile” trading conditions but UK like-for-like sales still declined 2.4 per cent.

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Although it said the conditions would remain “challenging”, it was optimistic that its trading performance would improve in its second-half after a recent increase in mortgage approvals, which traditionally drives sales of home improvement products.

Carpetright was also hit by exceptional charges as a result of restructuring after it closed 36 stores. On an underlying basis, which strips out these costs, profits fell 86 per cent to £1.4m from £10m. The group said the leases on a further 93 stores are due to expire in the next five years, which will allow it to further reduce the size of its retail estate, as people increasingly shop online.

The poor performance in the UK was partly offset by better trading at its stores in Holland and Benelux where underlying profits more than doubled to £2.9m despite a slight dip in sales. In the UK, underlying profits slumped to £800,000 from £11.3m a year earlier and followed a 5.6 per cent decline in revenues to £192.1m.

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