Carpetright, the floor covering market leader, today ditched its final dividend and posted tumbling full-year profits, laying bare the brutal squeeze on big-ticket spending.
Darren Shapland, the chain’s new chief executive, also fired a warning shot across the bows of the property sector by stating that leases on 88 of its UK stores come up for renewal in the next five years, giving it the opportunity to slash its rents or hand the keys back to landlords.
Carpetright, which has 490 stores in the UK and 142 on the Continent, saw its profit plummet by 76% to just £4 million for the year to April 28.
This followed a sharp fall in margins, as the company invested more heavily in price-promotions to convince consumers to part with their cash.
The retailer, whose chairman is Lord Harris, suspended its final dividend, as it takes a cautious view on consumer spending and seeks to pay down debt, which fell by £46.6 million to £19.1 million over the year.
Shapland, the former finance and development director at Sainsbury’s, said: “We have suspended the dividend for a period of time until the underlying profitability of the business is in better shape.”
On lease renewals at Carpetright, which closed about 49 stores, including concessions, last year, he said: “It is an opportunity to get better rental deals or negotiate with landlords to take smaller sites.”
