Carpetright and Halfords add to high street woes

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The Independent Online

Carpetright, the UK's biggest carpet retailer, has issued its second profit warning this year and its sixth in the past 12 months, as the slump in consumer spending shows no sign of abating.

Halfords widened the gloom enveloping the retail sector by guiding down full-year profit expectations for the second time in three months after a collapse in sales of car maintenance items, such as bulbs and batteries, over the 13 weeks to 1 April.

The bicycle-to-car accessories chain also admitted it would not meet its three-year profit targets for Nationwide Autocentres, Britain's biggest car servicing and MOT company, which it acquired for £73m in February 2010.

But it was Carpetright's expectation that its underlying profits for the year to 30 April would be down to around the £17.2m it delivered two years ago that made yesterday another grim one for retailers. Over the past two weeks, other retailers, from HMV to Dixons Retail, have also warned on profits.

Shares in Carpetright, which made profits of £28.2m in 2009-10, closed down 38.3p, or 6 per cent, at 671.5p yesterday. As recently as 1 February, Carpetright said its 2010-11 profits would be ahead of those posted in 2009.

Meanwhile, Halfords expects its profits to be between £124m and £127m for the year to 1 April, compared with a City consensus of £127m before yesterday's pre-close trading statement. On 13 January, the bike retailer had warned its profits would be at the lower end of a £127m-£135m range. Its retail like-for-like sales tumbled by 6.8 per cent over the quarter to 1 April.

But strong demand for bikes – such as the premium lines developed by Olympic champion Chris Boardman – helped sales in its leisure division rise by 6.1 per cent. Halfords has also kicked off a £75m share buy-back programme, which it will complete before its preliminary results in June.

On the outlook for UK consumers, David Wild, the chief executive of Halfords, said: "The reality is you look at every statistic of consumer confidence and spending, and it shows how consumers are pressurised."

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