Rainham, England, February 1--Carpetright Plc, the U.K.'s largest carpet retailer, said same-store sales have dropped since its second half began as consumer spending has slackened. The shares fell as much as 4.3 percent.
Sales at U.K. stores open a year or more declined 3.8 percent from a year earlier in the 13 weeks to Jan. 29, chairman and chief executive Philip Harris said in an interview today.
The company, which gets about a fifth of sales from people who are changing homes, is being hurt as demand slumps in the 19 billion-pound ($36 billion) U.K. housing market. Five interest rate increases since November 2003 have prompted many buyers to delay purchases. Prices last year rose at their slowest since 2001, HBOS Plc, Britain's biggest mortgage lender, has said.
"The housing market has come off the boil," Harris said. "It's going to be tougher for a while," he added, declining to be more specific.
Shares of Carpetright fell as much as 50 pence to 1,110 pence in London, cutting the company's market value to 764 million pounds. The stock was at 1,124 pence at 10:34 a.m. local time. It gained 38 percent in 2004, rising for a third year in four.
"Damage has been done in January," said Nick Bubb, an analyst at Evolution Securities in London, according to whom same-store sales fell 7 percent last month. "Though the overall carpet market was down by as much as 10 percent in January, according to suppliers, Carpetright hasn't been able to buck the trend. We assume the fourth quarter will be soft as well."
Bubb, who has a "hold" recommendation on Carpetright stock, cut his forecast for the retailer's annual profit before tax excluding property to 67 million pounds from 61 million pounds.
The company said it will continue to operate its "In House Carpets" concessions in 39 department stores belonging to Allders, which is in administration. Customer deposits and pre- administration orders will be honored, the company said.
"We pay very good rent at the Allders stores, so we'd like to stay there," Harris said. "If we do lose them, the impact will be marginal."
The company will update investors on its second-half business on April 26.
