Floorings giant Carpetright has issued another profit warning after sales in its beds business and in Europe disappointed.

Carpetright now expects to make underlying pretax profit of £3-4m in the year to April 28. Analyst expectations had been at about the £8m level.

Last year Carpetright made profits of £28m.

The profit warning comes despite a positive performance on like-for-likes, which rose 1.4% in the UK in the 11 weeks to April 14, driven by a “strong emphasis on value and service, introduction of a wider laminate range and an uplift in sales from refurbished stores”.

However, total sales in the UK fell 3.2%.

Chairman and chief executive Lord Harris of Peckham said:  “The fragile confidence of our customers continues to produce a weak and volatile floorcoverings market.  We are encouraged to see the UK floorcoverings business return to like-for-like sales growth and are cautiously optimistic that this trend will continue in to the new financial year.

 “In contrast to this, bed sales, while still showing growth, have been below management expectations and tougher trading conditions in The Netherlands and Belgium have also contributed to a weaker Group result for the final quarter.”  

The discretionary floorings market has struggled as cash-strapped shoppers put off big ticket purchases. Carpetright rival Allied Carpets collapsed into administration yesterday for the third time, and was bought by Floors2Go-owned General George, which acquired just nine stores.

In local currency terms, total sales in Europe – comprising The Netherlands, Belgium and the Republic of Ireland - decreased 4.7%, with like-for-likes down 4.4%. 

After accounting for the movement in exchange rates, total sales slumped 8%.

Carpetright said: “The level of bed sales in the UK has been below forecast and along with the weakening sales in Europe, will result in the full year underlying pre-tax profit being in the range of £3m-£4m.”

The market leader said bed sales “grew marginally” year on year in the fourth quarter, with an improved margin of over 700bps. Beds accounted for more than 6% of total sales in the period. 

However, it added that the overall level of sales growth “has been behind initial expectations, with a corresponding impact on Group profitability”.

“A series of performance improvement initiatives are planned for the new financial year,” Carpetright said.

Carpetright said that as a result of actions taken in the UK, second half gross margin is expected to be around 220bps below that achieved in the same period of the prior year.

It added that the full year cost reduction is now expected to be £7m, “both elements being an improvement on previous guidance”.