Carpetright shares plunge 47% after another profit warning

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Carpetright Christmas

Carpetright shares have taken a hit after a significant drop in sales during the weeks after Christmas prompted the retailer to issue a profit warning.

Shares were down by 47 per cent early this morning on the London stock exchange after Carpetright’s quarterly update for the 11 weeks ending January 13 revealed like-for-like sales had fallen 3.6 per cent.

Total group sales also dropped 2.3 per cent, with the flooring and furniture retailer blaming it on “reduced consumer confidence” and the “significant deterioration” in UK trade that came after positive start to the third quarter.

Carpetright also said UK flooring sales fell 1.4 per cent and bed sales continued to struggle.

However, its performance in overseas markets the Republic of Ireland, The Netherlands and Belgium, was positive, with like-for-like sales growing 4.3 per cent over the period.

Today’s trading update has prompted the retailer to once again slash it profit outlook to between £2 million and £6 million – a significant difference to the prior forecast of £13.8 million to £16.7 million.

“While average transaction values were up year-on-year, the number of customer transactions since Christmas was sharply down, which we believe is indicative of reduced consumer confidence,” chief executive Wilf Walsh said.

“Our response to the threat of new competition continues to be effective, with those stores that have traded against new local competition for more than 12 months performing ahead of the rest of our estate.

“Sales in our rest of Europe business have also been volatile but we continue to deliver like-for-like sales growth, primarily reflecting the introduction of lower margin service income.

“The severity of the decline in footfall over this key trading period and our more cautious view of the outlook for the balance of the year leads to a significant reduction in our full-year expectations.”

Carpetright operates 552 stores worldwide.

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