Carpetright's chief executive, the veteran Lord Harris of Peckham, said yesterday that trading conditions were the worst he had seen in more than 50 years in business.
Lord Harris said he was preparing for two more years of tough times as Carpetright cancelled its final dividend. "It's very tough out there," he said. "It's the toughest I've known since I've been in the business."
He blamed the weak housing market, government cuts and rising taxes for depressed consumer confidence with a knock-on effect on sales and profitability.
"Everyone is uncertain at the moment," he added. "When the cuts are out of the way and people know where they are, things might improve. If you've got two people in an office and one is going to go, they will both stop spending."
Carpetright will cut its number of stores by reviewing 50 when their leases come up for renewal over the next three years, Lord Harris said. He said the group would probably open 30 or 40 other stores in that time.
Lord Harris called on the Government to signal a reduction of the 50p tax rate to encourage job creation. "Including national insurance, we don't have a 50p tax rate, we have a 63p tax rate and with other benefits that means you have to earn £100,000 to employ someone on £30,000 and that's a lot," he said.
Carpetright, which has about 700 stores in Britain, Ireland, Belgium and the Netherlands, posted an underlying pre-tax profit of £16.9m in the year to 30 April – down from £28.2m the previous year. Sales in the UK and Ireland fell 6 per cent. Carpetright shares fell 22.5p, or 3.5 per cent, to 667.5p and have fallen 17 per cent this year. It paid an 8p interim dividend but will not make a final payout.
In more bleak news for the high street, TJ Hughes, the department-store chain, announced it was on the brink of administration. Founded in Liverpool in 1912, the company has 57 stores and 4,000 staff. In the year to 31 January, it lost more than £10m and was on the brink of collapse when Endless acquired it for a "nominal amount" in March.