Carpetright issued a profits warning as the housing market pick-up failed to boost sales as it hires former Dreams boss Nick Worthington.
It is the third profits warning in six months from the retailer.
Carpetright said the UK like-for-like sales increase it experienced in its third quarter had not sustained and it was yet to see any significant benefit from the uplift in housing transactions.
The floorings specialist said this, along with the continued tough trading conditions in the Netherlands, led it to reduce its pre-tax profit expectations for its year to £3.5m to £5.5m from a consensus of about £8m.
In the eight weeks to March 22, UK like-for-likes edged up 0.2% while total sales declined 0.8%. Excluding the expected decrease in sales in wholesale, the retail business would have reported a like-for-like increase of 0.9%.
Full-year gross margin is expected to be 80 to 100 basis points higher than the previous year.
Like-for-like sales in the Rest of Europe, which includes Netherlands, Belgium and the Republic of Ireland, decreased 5.3% and total sales dropped 5.3%. However, after the impact of currency movements, this translates to a 8.5% plunge in total sales.
It drafted in former Dreams boss Nick Worthington last week as operations director for Europe to strengthen its management in its troubled overseas business.
Carpetright group finance director Neil Page has insisted the retailer is on the right strategy of modernizing stores, growing digital and expanding its beds business.
“Modernisation is still delivering growth. We’ve done 265 to date, and are doing 14 in the next 5 weeks, meaning we will have done 279 out of 470,” said Page.
“We’re getting good growth from the high street shops. Digital is continuing to grow and we’re getting good growth from beds.”
He said he was “disappointed” the rebound in the housing market has not yet fed through into Carpetright’s sales, but remained confident growth would come.
“We’re still seeing growth but it hasn’t accelerated at the pace we expected it to,” said Page. “That’s not to say it won’t come, it just hasn’t come yet. All the indicators support that it will come. Mortgage approvals and housing transactions and the decline in the rate of inflation should put more money in pockets.”
Carpetright executive chairman Lord Harris said: “In our last trading statement, we reported that like-for-like sales in the UK were volatile, and this remains the case.
“Nevertheless, based on previous experience we had expected to see some recovery as UK housing transaction volumes improved. In the event, this has yet to materialise and the momentum established in the third quarter was not sustained.”
“With the important Easter trading period still to come, we are continuing to concentrate on a range of self-help measures as we seek to improve the group’s performance.”