Carpetright shares slumped to a fresh 52 week low of 180 before recovering slightly to 186 by mid afternoon, down 7% on the day. The company saw a 2.9% fall in UK same-store sales in the six months to October 29th, total sales down almost 4% to £222mln. First half profits dived 42% to £4.1mln amid a “challenging” first half.
Carpetright’s house broker, Peel Hunt, put much of the struggle down to new entrant to the market Tapi, which was setup by the founder of Carpetright’s son last year.
To try and protect market share Carpetright has been offering free fittings and large discounts in an attempt to fend off competition.
Chief executive Wilf Walsh said: “We have had a challenging first half – the full impact of the UK decision to leave the EU remains unclear; consumer demand remains uneven; the market is extremely competitive and the impact of currency movements have combined to give us substantial trading headwinds.
“To address these challenges and revitalise the business, we have a programme of activities underway, but these will take time to deliver their full effect. The positive impact at the initial 49 refurbished stores has given us the confidence to accelerate this part of the programme.
“We are now scheduling investment to 150 stores by the year end – 50% more than the original target and representing over one third of our UK estate. ”
“We have made an encouraging start to the second half with a return to like-for-like sales growth in both businesses. As we enter the important January trading period, we remain comfortable with the range of market expectations.”
“Looking longer term, we are confident that our plan to build on Carpetright’s strong foundations, to modernise the business and to ensure we capitalise as market leader to the full is still on track.”
Whilst management tries to pain a rosy picture being positive of the outlook less can be said by investors who have seen shares fall from highs of 505 a year ago to new 52 week lows of 180 in early trade.