Carpetright issued a profit warning on Tuesday despite an improving sales trend that included a double digit like-for-like increase in the tough Irish market.

The retailer warned: “While self-help initiatives are improving the group’s performance, based on the current pace of sales and margin improvement, full-year underlying pre-tax profit is expected to be slightly below the lower end of current market expectations.”

The warning came despite flat UK like-for-likes in the 12 weeks to January 21, an improvement on the 1.7% drop recorded in the 38 weeks to January 21.

Group sales fell 3.8% while like-for-likes at its European arm, comprising the Netherlands, Belgium and the Republic of Ireland, were flat.

Group finance director Neil Page said the turnaround strategy in Ireland was beginning to pay off. After closing stores and restructuring management, like-for-likes were up to double digits in the period.

In the UK, Page said Carpetright’s beds business had performed strongly. Margins for the second half are expected to fall by around a 300 basis points.

Page said margins were under pressure due to the investment in promotions. “We’ve got to remain extremely competitive in terms of pricing,” said Page.

He added that Carpetright is working hard on bettering its supplier terms, adding that chief executive and chairman Lord Harris was conducting “tough negotiations”.

Harris said: “I see no respite from the challenging environment over the next 12 months, but remain confident the group will emerge in a strong position once consumer demand improves.”