Carpetright issues profits warning

In a statement, the company said the level of bed sales in the UK has been below forecast and, along with the weakening sales in Europe, this will result in the full year underlying pre-tax profit being in the range of £3m to £4m.

After a warning in January, analysts had trimmed forecasts to about £6m.

Carpetright said sales at British stores open over a year rose 1.4 per cent in the 11 weeks to April 14, the bulk of its fiscal fourth quarter. That compared with a third quarter fall of 0.5 per cent.

However, like-for-like sales in Carpetright’s Europe division (Ireland, Belgium and the Netherlands) fell 4.4 per cent, having been up 0.3 per cent in the previous quarter.

“The fragile confidence of our customers continues to produce a weak and volatile floorcoverings market,” said Carpetright’s founder, chairman and chief executive Philip Harris.

“We are encouraged to see the UK floorcoverings business return to like-for-like sales growth and are cautiously optimistic that this trend will continue into the new financial year.”

Many Britons have been curbing spending as disposable incomes are squeezed by rising prices, muted wages growth and government austerity measures.

Carpetright has been particularly hard hit because of a stagnant housing market and because carpets are a discretionary purchase. It has responded by lowering prices, expanding into beds, upgrading its range of laminate flooring and cutting costs.

Shares in Carpetright, which have lost 9 per cent of their value over the last month, closed on Monday at 605 pence, valuing the business at £407m ($655 million).

Around a quarter of the equity is owned by the Harris family, while Bill Gates, America’s richest man, owns about 6 per cent.