26th Mar 2014 11:15
LONDON (Alliance News) - Carpet and floor coverings retailer Carpetright PLC Wednesday issued its third profit warning in less than six months, again citing further weakness in its Dutch business, and has now cut its full-year profit expectations by half from its last profit warning in January.
The carpet and floor-coverings retailer issued its first profit warning for the year back in October, when it said it was likely to see a decline in first-half earnings, logging an operating loss for its European business, due to a weaker-than-expected Dutch performance.
The firm also announced that Chief Executive Darren Shapland would be stepping down, without giving a reason for the management change.
Carpetright then issued a second profit warning in January, when it said it was expecting its full-year underlying pretax profit for the year ending April 26, to miss the lower end of market expectations at the time, which was for a profit of GBP7.5 million.
Just two months on, and the struggling retailer has cut its full-year profit expectations again, but this time in half. Carpetright said Wednesday that it has not yet seen any significant benefit from the improvement in UK housing transactions, and coupled with continued weakness in its Dutch business, it is now expecting an underlying pretax profit for the year in the range of GBP3.5 million and GBP5.5 million.
"Based on previous experience we had expected to see some recovery as UK housing transaction volumes improved. In the event, this has yet to materialise and the momentum established in the third quarter was not sustained," said Executive Chairman Philip Harris in a statement.
Carpetright said that while UK like-for-like sales increased slightly by 0.2% in the eight weeks to March 22, total sales declined by 0.8%. It said that full-year gross margin for its UK business is expected to be between 80 and 100 basis points above the prior year.
However, the carpet retailer's business outside the UK continues to struggle, dragged down by the weakness in its Dutch business. In local terms, like-for-like sales and total sales in the eight week period in the rest of Europe, which includes the Netherlands, Belgium and the Republic of Ireland, decreased by 5.3%. It said that taking into account currency movements, total sales fell by 8.5%.
"Trading in our Rest of Europe business continues to be dominated by the extremely difficult economic conditions in the Netherlands," said Harris.
The group recently appointed Nick Worthington, previously Chief Executive of Dreams, as Operation Director for Europe.
"With the important Easter trading period still to come, we are continuing to concentrate on a range of self-help measures as we seek to improve the group's performance," said Harris in a statement.
The retailer said it expects to report its full-year results on June 24.
Carpetright shares were down 3.9% Wednesday morning, trading at 563.50 pence per share.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
Copyright © 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
CPR.L