Thursday, February 25, 2021

Carpetright warns over profits after sluggish final quarter

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A slowdown in sales growth has prompted Carpetright to warn over profits as it prepares to release its full-year results.

The retailer recorded a 1.4 per cent rise in UK like-for-like sales in its final quarter to April 22, down from 1.9 per cent in the previous three months.

Meanwhile, Carpetright managed a 1.4 per cent rise in like-for-like sales over the final quarter, with the boost from the Brexit-hit pound helping total sales in the region spike by 11 per cent.

However, with 138 stores across Europe compared to 414 in the UK alone, the retailer‘s performance at home had a significant impact on its overall group finances.

Carpetright attributed its sluggish performance to a “more difficult consumer environment”, with consumer caution taking its toll on the business.

Chief executive Wilf Walsh warned that this would mean annual underlying profits will now be towards the lower end of expectations, between £13.9 million to £16.2 million in the year to April 29 – a contrast to the £17.3 million posted the previous year.

READ MORE: Carpetright welcomes return in sales growth

“In common with other retailers in the home improvement sector in the UK, we have experienced tougher trading conditions over the last three months,” Walsh said.

“Whilst we remain confident in our turnaround plan, the level of sales growth in our final quarter leads us to expect that full-year profits will be towards the lower end of the current range.”

Carpetright’s sales slowdown comes after it returned to positive UK sales in the previous three months.

The retailer endured a rough 2016 after the Brexit referendum and subsequent collapse of the sterling, with first half profits plunging 42 per cent to £4.1 million due to falling consumer demand, fierce competition and rising costs of imported goods.

Despite this, Walsh plans to carry on with Carpetright‘s overhaul, having refurbished 188 stores in its fourth quarter – more than the 150 that was planned.

The retailer‘s profit alert comes amid increasing fears of a consumer spending slump as inflation caused by the Brexit-hit pound starts to bite the UK retail sector as a whole.

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