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Business News

Carpetright has to cut prices in tough market

Carpetright, the UK's biggest floor-coverings retailer, gave warning yesterday it expects trading conditions to remain tough as it reported a 0.2 per cent decline in like-for-like sales.

Lord Harris of Peckham, theretailer's chairman and chief executive, said: "I see no respite from the challenging environment over the next year," adding that the overall UK carpet market was down between 15 and 20 per cent for the 12 weeks to 23 July, the period covered in the trading update.

Carpetright, which has issued three profits warnings this year, pointed out that its latest decline marked a significant improvement on the previous quarter, when like-for-like sales declined by 6.3 per cent. Lord Harris put much of the sales improvement down to heavy discounting, which he said had reduced its profit margin by two percentage points, compared with the same period a year earlier

Carpetright, in which Microsoft founder Bill Gates has a 6 per cent stake, is suffering along with much of the British high street as consumers seek to conserve cash, but has also been hit by the stagnancy in the housing market.

Philip Dorgan, a retail analyst at stockbroker Panmure Gordon, said: "We don't expect Carpetright's profits to return to peak and believe that it will take time for its core markets to recover." The company's shares fell by 2.7 per cent to close at 569p.