Carpetright PLC (LON:CPR) said it expects full year profit to meet the bottom end of market expectations following a decline in the first half, blaming weak consumer confidence and tough competition.
The floor coverings retailer reported underlying pre-tax profit of £2.1mln in the six months to 28 October, down from £5.1mln the same period a year ago.
The lower profits reflected the clearance of discontinued lines in the UK beds business and unsuccessful discounting promotions in the Netherlands and Belgium.
Profits were also affected by increased investment in modernising the store estate and core IT infrastructure, the company said in a statement.
Group revenue rose 2.6% to £228.1mln as the 20.1% hike in the rest of Europe division offset a 0.8% drop in the UK business.
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On a like-for-like basis, UK sales increased 0.7% following a 2.9% decrease last year, with growth in core flooring categories mitigating the beds clearance.
Like-for-like sales in the rest of Europe rose 6.5% after a 1.5% fall last year.
"The first half has undoubtedly been challenging. Consumer confidence remains fragile and we continue to manage the impact of intensified competition,” said chief executive Wilf Walsh.
“We have made pleasing progress in our core flooring business in the UK - like-for-like sales are up, more than half the UK store estate has now been refurbished and our customer service metrics have been improved significantly.”
The company opened two stores and closed 12 during the first half, reducing the estate by 10 stores to 554. Total store space declined by 1.5% to 5.0 million square feet.
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Walsh said the group has had an “encouraging start” to the second half with like-for-like sales in the UK up 1.4% in the six weeks to 9 December, thanks to robust growth in core flooring categories. Over the same six-week period, like-for-like sales in the rest of Europe grew 9.2%.
“While trading over the first six weeks of the new period has been encouraging, with an acceleration in like-for-like sales growth in both the UK and Rest of Europe, in light of the consumer outlook we are taking a more cautious view of the second half and now expect underlying profit before tax for the full year will be towards the bottom end of the current range of market expectations,” Walsh said.
Shares fell 5.41% to 175p in morning trading.