United Carpets Group plc (LON:UCG) expects profits to slump by as much as 64% in its current financial year as British shoppers continue to tighten their purse strings ahead of Brexit.
The specialist floors and carpets retailers, which had previously bemoaned the hot weather and World Cup last summer, said uncertainty around Britain’s upcoming departure from the EU had “weakened consumer confidence [and] created a softer housing market”.
As a result, competitors have been “aggressively” cutting their prices to get people through their doors, something which United Carpets has been forced to match.
That has had a knock-on effect on profitability, as has the increased marketing investments the firm has been making to try to drum up new business.
READ: UCG profits fall but bosses remain hopeful
UCG has also been working hard to develop its online presence which has helped to boost revenues but is yet to turn a profit.
Bosses now expect the AIM company to make a pre-tax profit of between £550,000 and £650,000 for the year ended 31 March, compared with the £1.52mln it made last time around.
“Looking ahead, the board are confident that the fundamentals of the business remain sound, as the group continues to operate from a stable store network, under a well-known and trusted brand with substantial cash balances and virtually no debt.
“The business is therefore well placed to take advantage of any improvement in market conditions.”
Investors weren’t so sure, and the stock, which has almost halved over the past year, was down another 4% to 4.8p on Thursday morning, valuing UCG at £4mln.