Carpetright discounts fail to lift sails
Retail group Carpetright today said sales remained depressed after deep discounts on its floor coverings failed to wake UK consumers from their slumber.
Carpetright said like-for-like sales in the UK and Ireland were 6.7% lower than a year ago during the 25 weeks to April 29.
Promotional offers launched over the summer included knocking a third off the prices of carpet rolls at its 382 stores. The group also decided that its Madness sales should include an extra 20% discount on products already being sold at half-price.
But rather than driving a significant uplift in sales, these offers ate into profitability and Carpetright said gross margins in the financial year so far were lower than a year ago.
Finance director Ian Kenyon said the warm weather in October had also hurt sales as customers often decide to buy and fit a carpet when they turn their heating on.
This was affecting orders and there was little optimism at the retailer that the market for floor coverings would turn the corner any time soon.
Mr Kenyon said: “Customers don’t appear to have changed their shopping patterns in terms of what they are buying – there just appears to be less of them.”
Analysts were disappointed by the trading update even though Carpetright insisted it was capturing significantly more of the market in the tough retail climate. It also stuck by its view that full-year margins will be higher than a year ago.
The sales figure announced today represents only a modest uplift on the 7.5% decline after 15 weeks of its financial year.
Seymour Pierce analyst Richard Ratner noted that laminate sales were down by at least a quarter in a shrinking market, but demand for vinyl products was up on a year ago.
His forecasts for profits were trimmed to £55m (€81.2m) from £60.2m (€88.8m), while he now expected Carpetright to muster £58m (€85.6m) next year against his earlier hopes for £63.2m (€93.3m).
In its statement, Carpetright added that total sales for the 25 weeks were down 6.2% even though its portfolio in the UK and Ireland had grown by 11 stores overall.
Total sales at its 93 stores in Europe were 7.1% higher than last year and it was winning the battle for market share.
