Published: Fri, March 02, 2018
Business | By Kate Woods

Carpetright shares dive following profit warning

Carpetright shares dive following profit warning

EDINBURGH, March 1 (Reuters) - Britain's biggest floor coverings retailer Carpetright (Other OTC: CGHXF - news) issued a third profit warning in four months and said it was talking to lenders to shore up its balance sheet - the latest stores group to suffer from United Kingdom consumers reining-in spending.

"The bank lenders have indicated that they now remain fully supportive", it said.

On Wednesday brutal trading conditions sank two high-profile UK retailers, with the collapse of Toys R Us UK and electronics chain Maplin into administration, threatening 5,000 jobs.

While the trend in Carpetright's United Kingdom like-for-like sales has improved since the January update, it remains negative, with trading across the rest of Europe also improved, led by a recovery in like-for-like sales in the Netherlands.

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It also also said that like-for-like sales in both the United Kingdom and the rest of Europe was still falling, despite a small improvement since its last trading update in January.

FLOORING firm Carpetright has started talks with lenders and flagged up an anticipated full-year loss as its retail sector woes continue.

Despite the upcoming key Easter trading period, Carpetright said that it now expected to report a small underlying pre-tax loss for the year to 28 April.

It had earlier warned over the full-year outlook in December.

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The company has 416 stores in the United Kingdom, the majority of which are in out-of-town retail parks.

It has already been refurbishing its estate in the United Kingdom as part of a turnaround strategy and looking to offload loss-making stores, which have been dragging on the wider performance of the firm.

"The question is whether Carpetright is just on the wrong end of a cyclical slowdown, or whether there is a deeper structural problem facing this business: the answer is probably some of both", he said.

It added that trading in the rest of the Europe division had also improved, led by a recovery in like-for-like sales in the Netherlands.

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He added: "Weaker consumer sentiment for big-ticket items is a factor, as well as tougher competition from a more diverse marketplace".

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