Carpetright lowers full year forecast
Carpetright has warned that underlying pre-tax profits for its full year are likely to be towards the bottom end of current market expectations after it experienced a “challenging” first half.
During the six months to 28 October, underlying pre-tax profit was £2.1 million compared to £5.1 million in the same period in the previous year although group revenue was up 2.6% to £228.1 million.
UK like-for-like sales in the first half of the year increased by 0.7% with growth of 1.9% in the retailer’s core flooring categories being offset in part by reduced bed sales, which were impacted by clearance of discontinued lines.
Like-for-like sales in the company’s Rest of Europe business were up 6.5%.
During the period, Carpetright continued to invest in store refurbishments which meant that 52% of the UK estate was trading under the new brand identity by period end.
Wilf Walsh, Carptright chief executive, said: “The first half has undoubtedly been challenging. Consumer confidence remains fragile and we continue to manage the impact of intensified competition. We have made pleasing progress in our core flooring business in the UK – like-for-like sales are up, more than half the UK store estate has now been refurbished and our customer service metrics have been improved significantly. However, as previously flagged, our first half profits reflect the impact of the clearance of discontinued lines in our beds business and also unsuccessful deeper discounting promotions in the Netherlands and Belgium, which are now being addressed.”
Carpetright said it has made an encouraging start to the second half with UK like-for-like sales up 1.4% in the six weeks to 9 December. Its Rest of Europe business also made a positive start with like-for-like sales up 9.2% in local currency over the same period.
Walsh added: “Looking ahead we will be focused on maintaining sales momentum in UK flooring, capitalising on the much-stronger new range to turn around our beds performance and improving overall trading in the Netherlands and Belgium. While trading over the first six weeks of the new period has been encouraging, with an acceleration in like-for-like sales growth in both the UK and Rest of Europe, in light of the consumer outlook we are taking a more cautious view of the second half and now expect underlying profit before tax for the full year will be towards the bottom end of the current range of market expectations.”
