Carpetright sales fall but branding boost keeps profits on track

Carpetright defied expectations that it would warn on profits on Tuesday, instead admitting that while gross margins will be hit by the weak pound it remains confident of hitting full year profit targets.

UK like-for-like sales were down 2.9% for the 25 weeks to 22 October, with group sales falling 5.5%.

Full year guidance for gross profit margin was reduced to 150-200 basis points as the carpets retailer's profits are trodden down by the effect of the collapse in sterling on product sourcing, as well as a competitive market and a change in product mix.

European sales were down 0.9%, better than expected, with gross margins there expected to rise 100-150bps for the full year.

On the upside, the new branding introduced to 49 stores has seen trading at these sites deliver better growth than the unmodernised estate.

The continued rollout of this new refreshment and rebranding programme was what allowed chief executive Wilf Walsh to keep guidance for the full year to remain unchanged.

"Trading conditions in the UK in the first half reflect variable consumer demand and increased competitive pressures," Walsh said.

"Against this background, our plan to revitalise the UK business remains on track and we are now almost halfway towards our target of 100 store refurbishments in the current financial year, with investment in the first half weighted to the latter part of the period."

Walsh added that the introduction of new hard flooring sections in 26 stores, has contributed to a 15% increase in laminate/luxury vinyl tile sales.