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.
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.