April 28, 2010 / 6:28 AM / 10 years ago

UPDATE 2-Carpetright CEO fears UK heading for "double dip"

* CEO surprised sales recovery not sustained

* 12 weeks to April 24 UK/Ireland l-f-l sales up 1.5 pct

* Shares down 7 pct on index down 2.1 pct (Adds detail, CEO, analyst comment, shares)

By James Davey

LONDON, April 28 (Reuters) - The head of Britain’s biggest floor coverings retailer, Carpetright CATVU.L, said a “double dip” in the UK economy was likely as his firm reported its second downbeat trading update in five weeks.

Chairman and Chief Executive Philip Harris, who has been selling carpets for 52 years, said on Wednesday there was “no question” Carpetright’s own sales had “double dipped”.

The firm, which trades from 586 stores in the UK and Ireland, regards itself as typically “first in, first out” of recession.

However, a sales recovery seen towards the end of 2009 had not been sustained, much to the surprise of Harris.

“Everyone talked about a double dip and we did,” he told analysts. “Christmas, September, October, November were very very good. (But) I’ve never seen a time where it goes very very good, where it goes back so much (as) it did in January and February.

“January I understood with the snow ... But I’m disappointed we haven’t had the recovery in February and March like I expected because it doesn’t normally go like that.” Harris cautioned that the downturn Carpetright has seen could follow in other parts of the retail sector.

“Does it mean that we’re going to have a double dip with the other people (retailers) coming to it, the fashion people who have had a good run? Probably yes,” he said, predicting a tough 2010.

Carpetright, which issued a profit warning last month, said sales at UK and Ireland stores open over a year increased 1.5 percent in the 12 weeks to April 24, the bulk of the firm’s fourth quarter.

The outcome was below internal expectations and compares with a rise of 1.4 percent in the seven weeks to March 20, a third-quarter increase of 2.3 percent and a second-quarter rise of 5.6 pct.

Shares in Carpetright, which have increased 61 percent over the last year, were down 6.7 percent at 829 pence at 0924 GMT, valuing the business at 603 million pounds ($920.7 million).

“Carpetright remains a high quality business but it will take longer to climb out of this recession than we would have hoped,” said Andrew Wade, analyst at Numis Securities, who cut his pretax profit forecast for the year to end-March 2011 from 50 million pounds to 44 million pounds.

Harris pointed out that Carpetright was still winning market share in a falling market.

He said his “gut feel” was that since Christmas the overall market was down about 25 percent, adding that he was hearing from suppliers that March and April were down 40 percent.

Finance Director Neil Page said consumer confidence was “fragile”, reflecting the uncertain economic outlook and the prospect of tax rises and further unemployment after the May 6 general election.

Carpetright said its businesses in the Netherlands and Belgium returned to like-for-like growth in the latest period with a rise of 1.6 percent.

Separately on Wednesday Britain’s biggest household goods retailer Home Retail HOME.L, owner of Argos and Homebase, met forecasts with an 11 percent fall in annual profit and announced plans to return up to 150 million pounds to shareholders. [ID:nLDE63Q18M] (Editing by Mark Potter and Rupert Winchester)

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