The warning follows weak high street sales figures for April reported by the British Retail Consortium on Monday and comes just two months after similar warnings from DFS Furniture, MFI and Carpetright.
John Lewis, the department store group, added to the bad news yesterday when it reported only a modest sales increase in the week to 9 May. It blamed the good weather last weekend which "drew customers away from shopping to other pursuits".
Allied Carpets said recent trading conditions had been difficult, particularly over Easter and the May Day bank holiday. "There seems to be a distinct lack of consumer confidence," said managing director Ray Nethercott. "We are just not getting the customers into the stores."
Allied Carpets shares plunged 34.5 per cent to 89p on the news, a fraction of their 215p issue price upon flotation two years ago. The warning dragged down shares in other retailers of higher ticket goods like MFI and Carpetright.
Mr Nethercott blamed a combination of higher interest rates and the strong pound which had affected workers in manufacturing industries.
"We are finding that the further north we go the worse it is for us," Mr Nethercott said. "If people are working less overtime they are more likely to think twice about investing a substantial sum in a carpet." Allied Carpets' average selling price is more than pounds 1,000.
Though reluctant to blame the weather he said the freak flooding over Easter had caused problems. It is understood that Allied Carpets has now stopped the expansion planned for its more mass-market Carpetland format.
Allied Carpets saw like for like sales grow by 11 per cent in January and continued to trade well in February and March. But over the crucial Easter period its sales were 10 per cent below those of last year.
It said it expected the trend to continue and that its full year profits would now be "considerably below" the pounds 16.2m achieved last year.
Brokers have downgraded their forecasts from pounds 19m to pounds 13m as a result. The company said it was maintaining the full year dividend.
Some analysts suggested Allied Carpets could now be a takeover target. However, the identity of a likely bidder is unclear. Carpetright, the main rival could expect to fall foul of the competition authorities.