Shares of Carpetright have dropped 40% following a profit warning for full-year accounts. A decline in UK trade after the Christmas period accounts for much of the loss. Profits are now likely to be between £2-6 million compared to original estimates of £14 million.
This news comes after other large businesses including Mothercare and House of Fraser issued profit warnings. Uncertainty in the business world is proving to be affecting the retail sector considerably.
Carpetright was established in 1988 by Lord Harris of Peckham when he opened the first store in Canning Town and 4 years later it was listed on the London Stock Exchange. December 2011 saw its first ever loss posted since 1993 which resulted in a number of store closures but the move lead to a 550% leap in profits the following year. The company currently has around 565 stores and has expanded into Belgium, the Netherlands and the Republic of Ireland.
Carpetright chief executive Wilf Walsh commented that: "We have seen a significant deterioration in UK trading during the important post-Christmas trading period” and “while average transaction values were up year-on-year, the number of customer transactions since Christmas were sharply down."
In December, Carpetright had said it expected profits to be at the "bottom end" of expectations amid a "volatile and unpredictable" consumer market. Neil Wilson from ETX Capital, said: "Profits warnings rarely come alone and so it has proved with Carpetright's shocker today. As we noted in December, the guidance appeared like wishful thinking and so it turned out to be the case. Again, it's the same old story as with other brands that have failed to adapt to changing consumer trends."
Although all the uncertainty in the business world with businesses going into receivership week on week, CMR can offer some light. A managed trade credit insurance policy will support your business by covering the risk of your customers being unable to pay invoices whether that be through insolvency or cash-flow difficulties.
Credit insurance can also be used as a tool to direct your business to new and to companies that can and will pay. Such an opportunity can open new markets to your business, increase your turnover and ultimately make you more profit. Credit insurance is more than just an insurance policy.