Flooring giant's gloomy outlook

The group issued a profits alert only last month and dashed hopes of a year-end sales revival after reporting that fourth-quarter sales growth so far had slowed markedly to 1.5 per cent from 2.3 per cent in the previous three months.

Shares dropped 6 per cent after the news and cautious outlook.

Carpetright chairman and chief executive Lord Harris: "UK market conditions have continued to be difficult.

"Since our last trading update, on March 23, sales have been slightly below our expectations, and we anticipate the year ahead to remain challenging."

Carpetright had seen tentative signs of a turnaround at the end of 2009, thanks to last year's more buoyant house market and the demise of rivals such as Allied Carpets.

But freezing weather in January and February hit demand, and the bounce back in the property sector has also since stalled.

Retail analyst Freddie George, at Seymour Pierce, said Carpetright's update for the 12 weeks to April 24 was "worse than we had expected" and reiterated his "sell" recommendation on the under-pressure stock.

However, analysts said yesterday's sales growth slowdown was in line with their forecasts and noted Carpetright's outlook for the new financial year would not be clear until after the General Election.

Carpetright has 586 stores and concessions across the UK and Ireland under the Carpetright, Storeys and Sleepright brands.

It also has 117 outlets in the Netherlands and Belgium, where trading has been improving. Carpetright recently pulled out of Poland.

The firm said the remaining European businesses "continue to trade well and have now returned to like-for-like growth", with same store sales up 1.6 per cent with currency effects stripped out in the most recent 12-week period.