Carpetright, Britain's biggest floor coverings retailer, has cut its annual profit forecast for the third time in less than six months, saying sales growth has slowed and it has yet to see any benefit from an improving housing market.
Shares in the firm, with more than 470 UK stores and concessions as well as 142 stores in the Netherlands, Belgium and Ireland, fell over 8 per cent in early Wednesday trade.
Carpetright is revamping its stores and product ranges in a bid to counter subdued consumer spending and tough competition in Britain, and reverse a slide in sales in the Netherlands.
However, the firm said UK sales growth at stores open over a year slowed to 0.2 per cent in the 8 weeks to March 22 from 1.9 per cent in its fiscal third quarter, while sales elsewhere in Europe fell 5.3 percent, dragged down by the Netherlands.
Britain’s housing market has been steadily improving, fuelled by a government scheme that has boosted buyer demand. Banks approved the highest level of mortgages since 2007 in January and last month the total amount of lending to buy homes rose to its highest level in nearly two years.
Analysts at Liberum noted the improving UK housing market had started to benefit some other retailers, suggesting Carpetright was being held back by company-specific problems, such as excess selling space and high rents.
Topps Tiles, Britain’s largest tile specialist, said on Tuesday it expected first-half profit to be up 70 percent on a year ago after a strong rise in sales.
“We maintain our view that Carpetright is suffering from company specific issues in terms of an over-spaced and over-rented store portfolio as well as strong competition from the independent segment,” the Liberum analysts said.
Carpetright said it now expected underlying pretax profit for the year to April 26 to be in a range of £3.5-5.5 million.
That was its third downgrade in almost six months after a warning last October, which prompted boss Darren Shapland to quit, and another in January.
In October, analysts had forecast a 2013-14 pretax profit of £13.0-14.6 million.
Reuters
