Carpetright sheds 350 jobs and 12 stores as cost drive continues

The cuts – representing about 12% of the floorings giant’s 3,000- strong workforce – came mainly from stores but also its head office.

Carpetright group finance director Neil Page told Retail Week: “We’re in an incredibly difficult market at the moment and can’t see any signs of recovery. But there are opportunities in managing costs.”

Some redundancies came from store closures. Carpetright shuttered 12 in its last quarter, including six in Ireland. Page said Carpetright would continue to examine potential store closures during the year. It has 682 stores across the group.

Last week the retailer issued its second profit warning in a month as it cautioned that underlying pre-tax profit for the year to April 30 was expected to be “slightly below” the £17.2m achieved in 2009.

Carpetright chairman and chief executive Lord Harris said rises in the cost of raw materials had led to “an acceleration of carpet price inflation” and would hit profits. “While we have, where possible, looked to pass some of this increase on to customers, the ongoing difficult trading conditions have required us to hold sale prices on many lines to ensure they remain competitive,” he said.

However, Page said this was a short-term issue that arose because cost increases were coming in unexpectedly quickly, and that the situation would “balance out next year” when the retailer would have time to factor in such cost rises to its prices.

Group sales declined 6.5% in the 11 weeks to April 16. In the UK and Republic of Ireland like-for-like sales dropped 6.3%. In local currency terms, like-for-likes in its Europe arm, comprising the Netherlands and Belgium, fell 5.7%.

Page said: “2011 will continue to be very difficult. It won’t be until 2013 that we start to see growth.”

However, Harris added: “The business remains well placed to capitalise on opportunities when economic conditions improve.”