Carpetright, the UK's biggest floor covering specialist, has warned that soaring raw material costs will drive carpet prices up by as much as 7 per cent over the coming months.
Lord Harris of Peckham also warned of a "difficult" year for retailers in 2011, as the 702-store chain posted a 28 per cent fall in half-year underlying profits to £10m. "Everyone has got inflation going on – I think that carpets will be 6 to 7 per cent dearer in February, March and April," the chairman of Carpetright said. "That will not be because of VAT – it will be because of theincrease in raw materials." Lord Harris added that the price of polypropylene – the raw material for the 70 per cent of UK carpets that are man-made – has shot up to nearly £1,200 per ton from £740 per ton last year.
Carpetright will kick off its sale on Boxing Day and Lord Harris expects "strong" sales ahead of VAT rising to 20 per cent on 4 January, but he said there had been little sign of consumers bringing forward purchases so far.
For the 26 weeks to 30 October, the retailer suffered a 2.7 per cent fall in revenues to £207.6m in the UK and Ireland, while on a like-for-like basis, sales tumbled by 6.1 per cent.
On consumer spending in 2011, Lord Harris said: "I think it is going to be a difficult year – the housing market is not going to be great and we have got public spending cuts." Total sales at Carpetright – which has 584 stores in the UK and Ireland, and 118 on the Continent – fell by 4 per cent to £248m.