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Carpetright issues third profit warning

Published: 27 April 2011
Carpetright has issued its second profit warning in a month after sales declined further in the 11 weeks to April 16, 2011.
Carpetright issues third profit warning
This is now the group's third profit warning of the year, with the company saying underlying profit before tax for the year to April 30, 2011 is now expected to be "slightly below" the level of profits achieved for the full year 2009.

At the beginning of the month, Carpetright said profits were expected to be broadly in line with 2009's £16.7m profit performance, while back in February it predicted they would be slightly ahead of this figure.

The warning came as the group reported sales down 6.5% for fourth quarter. In the UK and Ireland, sales also fell by 6.5%, with like-for-likes down 6.3%.

Total sales for the rest of Europe (The Netherlands and Belgium) saw a decline of 6.1% after allowing for the movement in exchange rates.

Chairman and chief executive Lord Harris of Peckham said tough trading conditions in the UK and Republic of Ireland had continued into Q4, with fragile consumer confidence producing a weak floor coverings market.

He added: "While the sales figures announced this morning do not include Easter trading, we do not expect the trend up to the financial year end, April 30, 2011, to be materially different. Increases in raw material costs continued in the final month of the quarter, leading to an acceleration of carpet price inflation.

"While we have, where possible, looked to pass some of this increase on to customers, the ongoing difficult trading conditions have required us to hold sale prices on many lines to ensure they remain at a competitive level. As a consequence, we now expect the total UK and Republic of Ireland margin will be flat year-on-year."

The company's lowered profit expectations were also a result of these factors, he said.

Carpetright closed several of its Irish stores last month after completing a review of its operations in that country.

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