Carpetright loses half its market value after profit warning

Carpetright, the UK's largest flooring retailer with 416 stores lost more than 50% of its market value this morning, over £54m, after it issued a second profit warning in two months, blaming a decline in sales since Christmas and weakening consumer confidence.

The warning from Carpetright comes at a point when we're hearing similar stories from other big ticket retailers, as it appears the UK consumer is choosing to reign in spending on big ticket home improvement items.

In the announcement, the company said like-for-like sales in its home market had fallen 3.6% in the 11 week period to 13th January 2018. However, in the key post Christmas sale period like-for-like sales in the core flooring category declined 7.1%.

Carpetrights performance has for some years been linked to the strength of the UK housing market and it is often regarded by analysts as a lead indicator on the health of the economy, having previously been first in and first out of a period of recession.

January has seen a range of retailer results and surveys indicating a slowdown in consumer spending and a greater focus on essentials, rather than luxury or high ticket items.

Read - December footfall sees sharpest decline in 4 years. 

Carpetright highlighted a sharp deterioration in trading in the important post-Christmas period, with sales significantly behind expectations. CEO Wilf Walsh said “The number of customer transactions since Christmas was sharply down, which we believe is indicative of reduced consumer confidence".

On the back of the announcement, shares fell 48% in early trading before recovering to just over 42% done by mid-afternoon. Other big ticket retailers were affected by the news with DFS down 3.4%, Kingfisher down 2.7% and Travis Perkins down 1.7%.

Source: Insight DIY Team

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