Carpetright cuts sales and profit-margin forecasts
The floor covering specialist Carpetright issued its ninth profits downgrade in 18 months yesterday and warned that it saw no respite over the next year from the brutal slowdown in consumer spending.
Carpetright, which has 643 stores in the UK and abroad, pulled no punches when it described trading as "volatile" from one week to the next, saying customers were waiting for promotional discounts before spending.
The hefty discounting, and an increasing proportion of lower-margin beds in its product mix, took its toll on the group's gross margins, which tumbled by 400 basis points in the 25 weeks to 22 October.
Further grim news from a 6.8 per cent fall in Carpetright's like-for-like sales over the past 12 weeks of the period led the group to warn that it now expects full-year pre-tax profit to be at the lower end of City expectations, of between £16.9m and £11.8m. The former was its actual profit figure in the year ending 30 April 2011.
Neil Page, the finance director of Carpetright, said: "It is a tough retail environment and we have, alongside many other retailers, found it a difficult situation."
While Carpetright's discounting has hit its margins, Mr Page was "pleased" with the response of customers to its latest Madness Discount promotion across all its products in September. He said: "When we offer the stronger promotions, people are spending more and that just shows they are seeking value at the moment."
The group is also fighting back by increasing, and smartening up, its bed offer in existing stores, as well as opening its first standalone bed shop under the Sleepright by Carpetright banner in Uddingston, Scotland, next week. It will add another four trial bed stores over the coming months.
Mr Page said Carpetright had reduced its losses in the Republic of Ireland and increased profits in the Netherlands and Belgium over the half year.
However, he said: "I think it is going to be a challenging and tough retail environment into 2012."
Shares in Carpetright, which has seen nearly 40 per cent wiped off its market capitalisation this year, ended up 5p at 490p yesterday.
Culinary experts in The Netherlands thought it was 'fresh' and 'tasty'
- 1 Nokia no more: Microsoft drops once-ubiquitous mobile name – in favour of its Lumia brand
- 2 Renee Zellweger on plastic surgery: 'I'm living a more fulfilling life and I'm thrilled that perhaps it shows'
- 3 Jimmy Carr's controversial Oscar Pistorius joke goes too far at the Q Awards
- 4 Australian café owner sparks debate after saying 'No' to having unruly children on premises
- 5 NHS staff banned from drinking tea or coffee on the job because it looks like they're not working hard enough
Renee Zellweger on plastic surgery: 'I'm living a more fulfilling life and I'm thrilled that perhaps it shows'
Isis releases first video showing the stoning of woman accused of committing adultery as her father shouts 'don't call me Dad'
Diwali: What is the festival of lights – and how is it celebrated around the world?
Nathan Cirillo: Final pictures emerge of soldier moments before he was shot dead by Ottowa gunman
Ottawa shootings: Terror strikes Canadian capital as attacks leave one soldier and one suspect dead
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Of course, teenage girls need role models – but not like beauty vlogger Zoella
Support for EU membership 'at highest level since 1991' with most Brits wanting to stay 'in'
Thousands with degenerative conditions classified as 'fit to work in future' – despite no possibility of improvement
Residents should throw a street party and mix with immigrant neighbours, councils told
Russell Brand threatened with arrest after filming outside Fox News headquarters
iJobs Money & Business
£350 - £360 per day: Ashdown Group: SQL Developer with T-SQL, Watford, Hertfor...
120-150k: Accountancy Action: We are looking for an experienced CFO from a min...
£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...
£18000 - £23000 per annum + Commission: SThree: The SThree group is a world le...