Carpetright hit by fresh downgrade

Carpetright has issued its second profits warning of the year in a further blow for the floor coverings firm as it battles weak consumer confidence.

The retailer’s shares dived 7% following the warning that profits for the year to the end of this month were likely to be no better than the level achieved in the 2008/09 financial year, when it made a surplus of £17m (€19.4m).

It has seen no let-up in grim trading conditions as households put off major purchases in the current uncertain economic climate. The low level of mortgage approvals and VAT’s rise to 20% have also impacted the firm, which is the UK’s biggest floor coverings retailer.

Carpetright downgraded expectations at the start of February, prompting analysts to reduce forecasts from £26 (€29.6m) to around £20m (€22.8m).

It added today: “Since the date of that statement, difficult trading conditions have persisted in the UK and Ireland, with fragile consumer confidence producing a weak floor coverings market.”

Carpetright has 574 outlets in UK and Ireland and a further 120 in the Netherlands and Belgium.

Freddie George, a retail analyst at Seymour Pierce stockbrokers, reiterated his sell rating on the stock following today’s update.

He added: “While Carpetright has the cash generation to ride out this recession and has a dominant market position, the next 12 months is unlikely to be easy and the outlook could even deteriorate further if, as seems likely, interest rates are increased in the second quarter.”