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Carpetright issues profit warning

Carpet right new format 2

Carpetright has issued a profit warning as a result of a slowdown in sales growth.

The carpet and flooring retailer posted a 1.4% increase in overall like for like sales in Q4, dropping from 1.9% in Q3. However, with 138 stores across mainland Europe compared to 414 in the UK, the retailer’s performance at home had a significant impact on its overall results.

Carpetright said that its slowing performance was due to a "more difficult consumer environment". 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 and £16.2 million in the full year to 29th April 2017, well below the £17.3 million posted last year.

Walsh said "In common with other retailers in the home improvement sector in the UK, we have experienced tougher trading conditions over the last three months. 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 experienced a challenging 2016 after the Brexit referendum and collapse of the sterling, with H1 profits declining 42% to £4.1m due to falling consumer demand, increased competition and the rising costs of imported goods. However, Walsh plans to continue with Carpetright’s overhaul, having refurbished 188 stores during Q4 – well ahead of the planned 150.

The retailer’s profit alert comes amid increasing fears of a consumer spending slump as inflation caused by the Brexit-hit pound starts to impact on the home improvement sector.

Source: Insight DIY Team

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25 April 2017

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