Floorings giant Carpetright is to hike up its prices by about 8% this year as it seeks to mitigate soaring costs including freight and petrol.
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The retailer said prices on some lines, such as wool-related carpets, may have to rise by as much as 20%.
Group commercial director Martin Harris said: “The quality has gone up [across the sector] but prices have remained static for decades.”
He blamed increased freight costs, business rates, fuel prices and a volatile exchange rate. “Consumers will either have to go down in quality or pay more,” he said.
Carpetright started increasing prices late last year and will implement further rises before April to hit the average of 8%.
Peel Hunt analyst John Stevenson noted that carpet price inflation had reached double-digit levels, with higher-end wool-mix product “particularly hard hit”.
Harris said the VAT rise had dampened sales in January but that the retailer was still up on last year on a like-for-like basis. However, he said it had benefited from weak comparables due to the snow hitting sales last January.
He remained optimistic on the outlook. “Our average selling price has remained the same so people are not trading down,” he said.
The news came as Carpetright issued a profit warning on Tuesday.
Seymour Pierce analyst Kate Calvert said Carpetright should emerge from the downturn in a stronger market position than before, but added: “This update may send a warning shot across the retail sector as it appears that January’s VAT increase and deteriorating consumer confidence has impacted underlying consumer demand further.”
Carpetright’s like-for-likes slumped 7.7% in the UK and Republic of Ireland in the 13 weeks to January 29.
Chairman and chief executive Lord Harris of Peckham blamed bad weather and consumer jitters.