Join our community of smart investors

Carpetright floored

Carpetright is struggling against increased competition and sterling weakness
October 26, 2016

Carpetright's (CPR) recovery story is running into trouble. The company has reported a 2.9 per cent decline in like-for-like sales for the first half, compared with 1 per cent in the first quarter. Furthermore, gross margins are expected to fall 150 to 200 basis points compared with previous guidance of a 50 basis point drop.

IC TIP: Buy at 195p

The flooring retailer is facing currency headwinds and tough competition, especially from fast-growing rival Tapi. That said, there are encouraging signs from the store refit programme and management has boldly said the company will meet full-year profit forecasts. We think this looks overly optimistic and, despite management assurances, broker Panmure Gordon downgraded its 2017 EPS forecasts by a fifth to 18.4p and now has 21.5p pencilled in for 2018.