Carpetright profits hit by fall in sterling and lower sales
The flooring retailer has been hit by choppy consumer demand and margins squeezed by the higher cost of importing goods in euros.
Tuesday 13 December 2016 14:49, UK
Carpetright has reported a slump in profits after it was hit by sliding sales and the weak pound.
Chief executive Wilf Walsh said it faced "trading headwinds" as a result of the collapse in the value of sterling since the Brexit vote, which has pushed up the cost of goods it buys in euros.
He also pointed to Brexit uncertainty and choppy consumer demand.
Pre-tax profit for the six months to 29 October fell 42% to £4.1m while UK like-for-like sales fell 2.9% compared with the same period last year.
Profit margins were squeezed by "the adverse impact of the fall in sterling to euro exchange rate on imported goods for resale".
Shares fell 7.5% in early trading.
The home flooring business has been shutting underperforming stores and cut the number of outlets by six to 429 during the period.
Carpetright is shifting focus towards hard flooring, a category that is seeing double digit growth.
Mr Walsh said: "We have had a challenging first half."
He said that the full impact of the UK decision to leave the EU "remains unclear" while consumer demand "remains uneven".
"The market is extremely competitive and the impact of currency movements have combined to give us substantial trading headwinds," he said.
He said the sales slide was "naturally disappointing" after 10 consecutive quarters of like-for-like sales growth but that the group still looked on track to meet market expectations.
The group said it had seen a promising start to the second half with UK like-for-like sales up 2.6% in the six weeks to 10 December and its business in Europe also seeing an upturn.