Business

Carpetright lowers full-year forecast amid 'fragile' consumer confidence

Half-year profits at Carpetright have plunged by 92.7 per cent
Half-year profits at Carpetright have plunged by 92.7 per cent Half-year profits at Carpetright have plunged by 92.7 per cent

RETAILER Carpetright has revealed half-year profits crashed by 92.7 per cent and warned full-year earnings will be towards the bottom end of expectations in a "volatile and unpredictable" consumer market.

The group cautioned over a "fragile" consumer outlook and intense competition as it posted bottom line pre-tax profits of £300,000 for the six months to October 28, down from £4.1 million a year earlier.

On an underlying basis, profits more than halved to £2.1 million from £5.1 million a year ago.

Carpetright said a challenging first half saw profits impacted by a clearance sale to shift discontinued bed lines as it overhauled the entire range, as well as "unsuccessful" discounting in the Netherlands and Belgium.

UK like-for-like sales rose 0.7 per cent in the first half, but UK earnings fell 27 per cent and profit margins dropped heavily in its European arm.

The chain said sales had picked up in the first six weeks of the second half - rising by 1.4 per cent on a like-for-like basis in the UK - but cautioned over the second half as it said consumers were being hit by an income squeeze.

Wilf Walsh, chief executive of Carpetright, said: "When wage inflation fails to keep pace with RPI (inflation) there has, at some stage, to be a tipping point when customers tighten their belts.

"As the Brexit divorce terms remain unclear, the consumer market has remained volatile and unpredictable, but whatever happens we believe we can maintain and indeed grow our share in the core flooring market."

He added: "In light of the consumer outlook we are taking a more cautious view of the second half and now expect underlying profit before tax for the full year will be towards the bottom end of the current range of market expectations."