No let-up in the trading pain for carpet company

The group said like-for-like sales in the UK and Ireland fell 7.7 per cent in the 13 weeks to January 29, a period covering December's snow disruption but also easier comparisons with the freezing weather seen in January 2010.

Chairman and chief executive Lord Harris of Peckham said: "Although we have achieved an increase in sales year on year since Christmas, this has not been at the level expected. This causes us to remain cautious about the outlook for the remainder of the financial year."

Carpetright warned that profits for the year to April will be below last year and lower than current market expectations of around 26.3m, although still ahead of the 17m achieved two years earlier.

Matthew McEachran, a retail analyst at Singer Capital Markets, said profits were now likely to be in the range of 19m and 20m in the absence of any improved demand trends before April – a 20 per cent cut to City forecasts.

Lord Harris – a veteran of the retail sector with more than 50 years' experience – said adverse weather and fragile consumer confidence had made life difficult in the floor coverings market.

As well as January's rise in VAT to 20 per cent, Carpetright has seen sales of big-ticket, housing-related items impacted by a low level of mortgage approvals.

Carpetright's fortunes are closely linked to mortgage approvals and the state of the housing market.

A survey from mortgage lender Nationwide showed yesterday that house prices fell slightly less than expected in January, continuing the moderate downward trend in place since the middle of 2010.

Lord Harris added that the business remained well placed to capitalise on opportunities when economic conditions improve.

Carpetright has 574 outlets in UK and Ireland and a further 120 in the Netherlands and Belgium.

The Carpetright data suggests that consumers are becoming less prepared to spend as higher inflation, fuelled by January's VAT hike and muted earnings growth bites into their purchasing power.

Carpetright said like-for-like sales at stores in The Netherlands and Belgium fell 5.0 per cent, having been down 2.9 per cent in the first half.