Flooring specialist Carpetright has issued a second profit warning this morning, as its Netherlands arm saw a “further deterioration”, with “extremely difficult economic conditions” persisting in the third quarter (13 weeks to 25 January).
It expects full year underlying pre-tax profit to be "below the lower end of current market expectations."
Carpetright, which operates in the UK, the Netherlands, Belgium and Ireland saw total sales outside of the UK drop by 7.7 per cent, in local currency terms. Total sales declined by 7.5 per cent.
In the UK, however, like-for-like sales were up 1.9 per cent, and Belgium and Ireland performed in line with expectations.
The group issued a profit warning back in October, alongside the shock news that chief executive Darren Shapland was stepping down with immediate effect, just 18 months into the role.
Executive chairman Lord Harris has said today that, despite a tough market, the company’s self-help measures have helped it grow sales, but things remain difficult:
We have noted in recent announcements that the like-for-like sales performance in the UK has been volatile, and this remains the case. That said, UK profit is in line with our expectations and is expected to be ahead of last year for the year as a whole.
In a note yesterday, Matthew Taylor of Numis commented that UK pickup for the company over the first half signalled improving consumer confidence, with mortgage approvals starting to feed through, despite squeezed incomes. It looks like this continued to be the case into the second half, although it's evidently not the same story on the continent.
When it comes to its Rest of Europe business, Carpetright expects it to be loss-making for the financial year, although still cash generative.
Carpetright will report its full-year results on 24 June.