Sales Improve but Carpetright Expects Tough Year

London, England, Feb. 3, 2009--The sharp decline in sales at Carpetright slowed in January, as consumers used extra cash from lower mortgage and fuel bills to spruce up their homes instead of moving. But the UK's largest floor covering retailer warned it was still expecting a tough year ahead.

Lord Harris, the chairman of Carpetright, said sales in January had been "better than expected" and described improved sales compared to the experiences of November and December in the UK.

For the five weeks to 31 January, Carpetright's underlying sales – excluding new stores – fell by 2.9 per cent compared to a fall of 15.9 per cent for the quarter as a whole. In the UK and Ireland, the retailer's total sales in the five weeks to 31 January were up by 7.9 per cent, compared to a fall of 9 per cent over the quarter.

Lord Harris said this recession was following the pattern of previous ones, where carpet retailers are the first to be hit by reduced discretionary spending but this is followed by cutbacks in expenditure on vacations and cars.

"The group, which has 696 stores in Europe, said its gross margins remained level with last year. "I think in a very difficult market with the euro moving about so much, to hold gross margin is good," said Lord Harris. Carpetright said there has been "no significant" changes to the financial position of the group since its interim results on16 December.

Lord Harris added that Carpetright was "gaining market share" in the UK and on the continent, but he warned there was unlikely to be much respite without a wider economic recovery. "Until we are able to see some confidence in the economy return, trading will continue to be challenging," he said.

Lord Harris also said he was "not at all" interested in making a bid for Allied Carpets, the 218-store floorcovering retailer, which is up for sale after experiencing trading difficulties of its own.