Carpetright suffered a sharp slowdown in sales during the July heatwave as consumers opted not to spend time during the sunny weather buying carpets in out-of-town stores.
Like-for-like sales in Carpetright’s UK business had been running about 3 per cent higher year on year during May and June. However, the group reported a 1 per cent drop in like-for-like sales for the 12 weeks to July 20 because of the good weather over the past few weeks.
Darren Shapland, the chief executive overseeing the retailer’s turnround plan, said: “The sun has come out and people are spending [the good weather] doing outside projects.”
Many of these sales will not come back later in the year, warned Mr Shapland. “If you went back to when people had lots of disposable income, that would be the case. But some of the sales are now gone, as they’ve spent [the money] on other things.”
Monthly mortgage approvals are running at 30,000 – about 40 per cent of their historic average of 75,000.
Slack consumer demand has created a supply glut in the carpet sector, leaving Carpetright with enough bargaining power to squeeze suppliers. Improved terms with suppliers helped the retailer increase its gross margin by 80 basis points in its core UK business.
Carpetright’s European division, which makes up about a sixth of its total business, continued to struggle, with like-for-like sales down 10.6 per cent driven mainly by the stagnant housing market in the Netherlands.
Mr Shapland said Carpetright expected to improve margins by 50 basis points over the year as it attempts to cut the number of its stores and refurbish the remainder. “It doesn’t compensate for [falling] sales but it helps,” he added.
Shares in Carpetright fell 2 per cent to 668p in early afternoon trading.
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