Carpetright has reported a 5.2% decline in group sales for the 12 weeks to October 22, and warns full-year profits will be at the lower end of current expectations.
Sales in the UK declined by 6.8%, with like-for-like sales down 3%. Sales volumes were closely linked to periods of higher levels of promotional discounts, and this, alongside an increasing proportion of beds in the sales mix, will dilute gross margin by around 400 basis points in the first half, said the company.
Carpetright has made efforts to offset this by reducing its cost base and focusing on self-help measures, including rationalising the UK store base. The company has closed 17 outlets and 19 concessions since April 2011.
Total sales in the company's European division (The Netherlands, Belgium and the Republic of Ireland) decrease by 1.8%, with like-for-like sales down 1.7%. However, this translates to a total sales rise of 2.9% after allowing for the movement in exchange rates.
Carpetright has also developed and expanded its beds business, which now represents around 6% of revenue. The company has hired two former directors of Bensons for Beds, Bill Carrahar and Paul Burgham, to launch a chain of standalone bed stores under the name 'Sleepright by Carpetright' in five of its existing carpet outlets.
The new team will also launch a "significantly improved" beds range in the third quarter of its current financial year, said the company.
Chairman and chief executive Lord Harris of Peckham said: "We expect underlying pre-tax profits for the full year to be towards the lower end of the current range of expectations. Looking forward, I see no respite from the challenging environment over the next year but remain confident the group will emerge in a strong position to deliver future growth once consumer demand improves."