A sluggish housing market and lower consumer confidence have certainly caught up with Carpetright.
Profits are below market expectations and the tone of its guidance statement is decidedly gloomy despite some positive revenue signs coming through early in the second half.
Competition is also biting, with intense margin pressure not just evident in the Netherlands and Belgium: the UK operating margin has slumped a whole 0.7 percentage points to 1.9%.
Management is working hard to stave off the competition with store refurbishments and there’s some potential upside in the bedding business as the old range is cleared.
But with the company’s cash balance eaten away and net debt rising, the reappearance of dividends looks far from imminent.
Fiona Cincotta – Senior Market Analyst – www.cityindex.co.uk