Carpetright plc, Europe’s specialist carpet and floor coverings retailer, has announced an update on trading for the 11 weeks ended 13 January 2018.

Despite reporting sales growth in the third quarter, trading in the important post-Christmas period has been significantly behind expectations, the company has said.

Total Group sales were reported as down by 2.3%, and sharp deterioration in the UK trade has had a "significant impact on profitability".

Carpetright issued a profit warning in its trading update, with a revised full year profit guidance in the range of £2.0million to £6.0million.

UK trading was impacted by lower customer footfall, with transaction numbers down significantly year-on-year, and like-for-like sales saw a decline of 3.6% in the 11 weeks, with a decrease of 1.4% within the flooring category, and a further material decrease in bed sales.

Whilst the company admits it has long faced competition from “a vibrant independent sector” and from a number of national and regional retailers in the UK floorcoverings market, and with competition intensifying significantly during last year, Carpetright has reported that it has "continued to perform well against new competitors."

“A new national competitor rolled out an aggressive store opening programme and a number of smaller players also began competing more actively at a local level,” said Carpetright, with the first comment most probably a reference to flooring retailer Tapi, which was launched by the son of Carpetright’s founder Lord Harris of Peckham in 2015.

Carpetright continues to implement its strategic investments with four stores opening and 14 closed in the year to date, giving a net reduction of ten and leaving 416 trading locations.

Wilf Walsh, Chief Executive, said: "Despite a positive start to our third quarter, we have seen a significant deterioration in UK trading during the important post-Christmas trading period. While average transaction values were up year on year, the number of customer transactions since Christmas was sharply down, which we believe is indicative of reduced consumer confidence.

"Our response to the threat of new competition continues to be effective, with those stores that have traded against new local competition for more than 12 months performing ahead of the rest of our estate.

"Sales in our Rest of Europe business have also been volatile but we continue to deliver like-for-like sales growth, primarily reflecting the introduction of lower margin service income.

"The severity of the decline in footfall over this key trading period and our more cautious view of the outlook for the balance of the year leads to a significant reduction in our full year expectations.

"Against this background of a further deterioration in market conditions, we remain committed to driving through the improvements that are essential to the long term repositioning of the business."

The Group will issue a pre-close update on Tuesday, 24 April 2018 and will report its preliminary results for the financial year ending 28 April 2018 on Tuesday, 26 June 2018.