Carpetright issues new profit warning
- 24 April 2012
- From the section Business
Carpetright has again warned that its profits will be lower than previously forecast, blaming disappointing bed sales in the UK and weak trading in continental Europe.
After issuing a string of warnings over the past year, it now expects full-year pre-tax profits of between £3m to £4m.
After its last update in January, analysts had predicted profits of £6m.
Fragile consumer confidence continued to produce a weak and volatile floorcoverings market, the firm said.
In the 11 weeks to 14 April 2012, UK like-for-like sales - those at stores open more than a year - rose 1.4%, but like-for-like sales in Europe fell 4.4%.
Carpetright launched a new range of beds at the beginning of the year, but said "the overall level of sales growth has been behind initial expectations, with a corresponding impact on group profitability".
Tougher trading conditions in the Netherlands and Belgium also contributed to a weaker result in the quarter.
Carpetright has been hit by the consumer downturn and by the slowing housing market.
It has attempted to combat this by cutting prices, expanding into beds and upgrading its range of laminate flooring.
"The group's ability to disappoint shows no sign of abating," said Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers.
"Whilst management can exempt themselves from the deteriorating conditions in Europe, a move into bed sales was a prior group initiative.
"As such, improvements elsewhere have unfortunately been partially undone, with the result that profit guidance is again being lowered."
Shares in the retailer closed down 2.0%, having been considerably lower earlier in the day.