Carpetright sales slump as confidence plummets
Aug 6 2008 by Iain Laing, The Journal
CARPETRIGHT has reported a 15.4% slump in like-for- like sales in the UK and Ireland in the 13 weeks to August 2.
The group said it had been a demanding first quarter and conditions were likely to remain tough, but it expected to increase its market share because of recent operational improvements.
Carpetright has 559 stores in the UK and Ireland, including 60 concessions and 38 Storeys outlets. The group bolstered its business last year with the £18.5m acquisition of Sunderland group Storeys, which operates under the brands Walter Wall Carpets, Woodland Floors and UKCarpetsDirect.com
Altium Securities analyst David Stoddart said the figures for the UK and Ireland were much worse than expected.
He said in a note: “The first quarter last year was the strongest quarter of the year. Nevertheless, this is a disturbing sales performance from a strong market leader that we would expect to outperform the wider market.”
Despite the company reporting a further improvement in margins, Mr Stoddart said he expected a sharp reduction in his profit forecasts.
In yesterday’s trading update, Carpetright said its business in the rest of Europe, based on the Netherlands, Belgium and Poland, continued to make solid progress, with sales in local currency improving by 8.2%.
Chairman and chief executive Lord Harris of Peckham said the tough first quarter in the UK reflected plunging consumer confidence and the lowest mortgage approvals since records began.
He said: “The trading environment in the UK has become more difficult and we can see this continuing for the rest of our financial year. However, we believe that our recent operational improvements enhance our resilience to challenging market conditions and that our strong competitive position will enable the business to continue to grow market share.”
Lord Harris, who launched the business from a store in Canning Town, east London in 1988, announced last year he was considering an offer for the group.
But the potential £850m move, which came after a period of disappointing trading for the company, was dropped last March because of difficult credit conditions. He is also a substantial shareholder in the business.
