London, July 1--Britain's largest floor-covering retailer, Carpetright Plc, reported a bigger than expected dip in annual profit on Tuesday but said it expected to meet analyst earnings forecasts this year despite tough markets.
The company, which sells carpets, vinyl and wood laminate floors at around 350 stores across Britain and Ireland, said same-store sales growth slipped to 2.2 percent in the region in the first eight weeks of the current financial year.
But its confident view on the outlook lifted its shares. By 0826 GMT the stock, which has underperformed the wider retail sector by around 10 percent so far this year, was up 3.3 percent at 627-1/2 pence.
"Their UK business seems to be trading fine, the question is how long will this continue," said Iain McDonald, analyst at Numis Securities. "It will get weaker as the year goes on."
Carpetright's fortunes, like other UK retailers, are tied to slowing consumer demand as the economy weakens and a cooling house market leaves many people with less money to spend.
The firm posted annual profit before tax of 50.9 million pounds ($84 million) in the 53 weeks to May 3, down from 52.5 million pounds a year earlier. Analysts had forecast profit of around 53 million pounds, according to Reuters Research.
Carpetright said it was satisfied it would meet analyst forecasts for an increase in pre-tax profit to between 62 million and 64 million pounds ($102-105.5 million) this financial year.
"We're comfortable with that sort of range on a budget of no like-for-like sales growth," Chairman and Chief Executive Philip Harris told Reuters on Tuesday.
The firm, which made its first foray into Europe last year, said cost cutting and increased profit margins would help it cope with the slowdown it had seen in the region in the first two months of the year.
"We still think the European strategy's right. We're busy building market share...We're absolutely on track," said Carpetright's finance director Darren Shapland.
CEO Harris said he saw no signs of a pick up in consumer demand in the UK, but said the company was well placed to weather tougher conditions.
"But our proposition always does well in a slowdown as people trade down," said Harris.
Carpetright said it recommended a final dividend of 22 pence a share, giving a total dividend of 37 pence.
