Carpetright sales collapse

CARPETRIGHT, Britain's largest carpet retailer, signalled further problems in the durable goods market yesterday when it reported lower- than-expected profits and warned of a difficult year ahead.

Lord Harris, Carpetright's chairman, said the carpet market was "the worst I've seen in my 40 years in the industry". Carpet sales collapsed after Christmas, he said, with the market down by more than 20 per cent.

Carpetright shares fell 13 per cent to 274.5p, their lowest level for four years. The poor figures dragged down shares in other durable goods retailers, with MFI, DFS and Courts all seeing sharp falls.

Analysts blamed the weak market on rising interest rates deterring consumers from buying higher-ticket items. Job insecurity, particularly in the North, is also putting people off committing themselves to longer-term credit, they said.

Others said Carpetright may be a victim of changing fashions in floor coverings as increasing numbers prefer stripped wood floors to carpets. But this was dismissed by Lord Harris. "I can tell you that is not true. The wood market is rising and we are going into it in a small way, but it is still a tiny proportion of the whole market."

He was speaking as Carpetright reported a fall in full year pre-tax profits from pounds 32m to pounds 29m last year.

The company was hit by a steep rise in its cost base as well as weaker sales, which were flat on a same-store basis over the year. The company has now scaled back its expansion plans and is aiming for a total of 350 stores instead of the previously planned 450.

Investment column, page 21