Housing market woes hit Carpetright sales

Shares in Carpetright fell to their lowest level in almost four months after the floor coverings retailer warned that tough trading conditions would extend into next year as the number of mortgage approvals continued to decline.

The news sent analysts rushing to downgrade full-year earnings forecasts, as investors focused on the gloom in the UK and Irish market, overlooking a more sanguine picture from Belgium and the Netherlands.

EDITOR’S CHOICE
Argos sales slide hurts Home Retail - Oct-20.Supermarkets seek festive domination - Oct-26.In depth: UK retail results - Oct-27.Housing uncertainty hits Topps Tiles - Jun-03..Total group sales fell 5.2 per cent during the three months to October, with 0.5 percentage points of the fall coming from the decision to leave the Polish market.

“The tough trading environment in the UK and Republic of Ireland continued into the second quarter of our financial year,” said Lord Harris of Peckham, chief executive.

“The further reduction in mortgage approvals along with fragile consumer confidence has produced a difficult market. We expect these market conditions to continue into 2011.”

The retailer on Wednesday reported a 7.3 per cent drop in UK and Ireland like-for-like sales for the 12 weeks to October 23. Total sales in the region, where Carpetright has 702 stores, fell 4.6 per cent. It closed four stores in the period.

However, the performance was better in Belgium and the Netherlands, where the group opened two stores during the same period, taking the total to 118.

Like-for-like sales for the region dropped 1.2 per cent, with total sales down 0.2 per cent in local currency terms.

Shares in Carpetright fell 30½p to 699½p.

Source : John O'Doherty - FT.com