Carpetright warns on profit

By Dan Lalor

LONDON (Reuters) - Carpetright (CATVU.L) chairman Philip Harris, a 50-year veteran of carpet selling, said the coming year was set to be one of the most difficult he had seen, after the retailer posted an 11 percent fall in annual profit.

Carpetright shares fell 6.8 percent to a five-year low at 615 pence, before recovering to 621 pence by 8:30 a.m. British time.

"There is no doubt that the UK floor coverings market became more difficult, in line with other housing and DIY related sectors. This challenge has remained," Harris said on Tuesday.

Finance director Jason Grover told reporters he expected analysts to cut their forecasts for underlying 2008-09 profit given challenging trading conditions.

He would not quantify current trading in Britain and Ireland, where like-for-like sales fell 2.7 percent in 2007-08.

Carpetright's house broker, Deutsche Bank, was less coy.

It forecast first-quarter like-for-like sales will fall over 10 percent and that full-year like-for-like sales will fall 7 percent fall. Its prior forecast was for a 2.5 percent annual fall. Deutsche has a "buy" rating on Carpetright stock.

Carpetright made a pretax profit of 59.5 million pounds in the 53 weeks to May 3, on revenue up 9.6 percent to 521.5 million pounds. Underlying profit, excluding exceptional items, rose 7.6 percent to 62.1 million pounds.