Carpetright issues third profit warning in 3 months

At 7am this morning, Carpetright issued their third profit warning in less than three months, as the UK's largest high street flooring retailer with 426 UK stores, battles to deal with falling sales in the UK.

In just 5 years, Carpetight shares have declined from £6.58 to just 55p this morning.

Read - Carpetright loses half its market value.

Here's their latest trading update:-

Trading conditions in the weeks since the Group last updated the market on 19th January 2018 have remained difficult, characterised by continued weak consumer confidence. While the trend in the Group’s UK like-for-like sales has improved through the intervening period, it remains negative.

Trading in the Rest of Europe has also improved, led by a recovery in like-for-like sales in the Netherlands. Although the important Easter trading period is still to come, UK like-for-like sales remain below management expectations and the Group now expects to report a small underlying pre-tax loss for the year ending 28 April 2018.

The Group is therefore proactively engaged in constructive discussions with its bank lenders in order to ensure it continues to comply with the terms of its prevailing bank facilities. The bank lenders have indicated that they currently remain fully supportive.

In addition to the discussion with its lenders, the Group is examining a range of options to accelerate the turnaround of the business and strengthen its balance sheet. This process remains at an early stage and the Group will update the market on these initiatives as required.

Analysis & Comment - Steve Collinge

Often seen as the retailer 'first in and first out' of a recession, the rate of deterioration of sales at Carpetright is very concerning. When added to yesterdays update from Travis Perkins and the impact of the slow-down in the core DIY market, clearly consumers are continuing to reign in high ticket expenditure. The poor weather experienced at the end of February and early March will do nothing to help any of the home improvement and garden retailers, who are currently all sitting with displays of BBQ's and garden furniture, keeping their fingers crossed that weather over the increasingly important Easter period will bring consumers back to the bricks and mortar stores.

Source: Insight DIY Team

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