Floorings specialist Carpetright has today issued its second profits warning in three weeks after reporting another sales decline.
Year-on-year like-for-like (LFL) sales in the UK and Republic of Ireland were down 6.3 per cent and Rest of the World LFLs slipped 5.7 per cent in the 11 weeks to April 16th 2011, prompting Chairman and CEO Lord Harris of Peckham to announce a negative forecast for full-year results.
Having said on April 7th that underlying pre-tax profits for the 12 months to April 30th were expected to be “broadly in line” with those of the full 2009 financial year, he now predicts that it will be slightly below this figure.
Investors had already been made aware in February that the forthcoming annual profit statement would be down year-on-year.
Lord Harris of Peckham commented: “Tough trading conditions in the UK and Republic of Ireland continued into the fourth quarter of our financial year, with fragile consumer confidence producing a weak floor coverings market.
“While the sales figures announced this morning do not include Easter trading, we do not expect the trend up to the financial year end, April 30th 2011, to be materially different.”
He explained that increases in raw material costs continued in the final month of the quarter, prompting carpet price inflation.
“While we have, where possible, looked to pass some of this increase on to customers, the ongoing difficult trading conditions have required us to hold sale prices on many lines to ensure they remain at a competitive level.”
Total UK & Republic of Ireland (ROI) margin is now expected to be flat year-on-year, with trading in the latter particularly difficult as Carpetright sales has seen sales there fall by more than 50 per cent in the last three years.
“A review of operations in ROI has been completed and actions taken to reduce the store portfolio by six stores to bring the cost base back into line with the prevailing market opportunity,” the CEO added.
“These actions leave the region in a stronger position as we await a recovery in economic conditions.”