Oriel reviews 'hold' on Carpetright after profit warning

26th Mar 2014 11:07

Oriel Securities is reviewing its recommendation on Carpetright after the floor covering retailer warned on annual profits.The broker said it was reviewing its 'hold' advice after Carpetright said it expected underlying pre-tax profit in the year to April 26th to be between £3.5m and £5.5m, against a market consensus of £7.6m.Carpetright said fourth quarter trading had failed to match the third quarter's, it had yet to cash in on the UK housing market recovery and it was facing tough trading in its Dutch business.It said it was planning to improve the business with "self-help measures" such as refurbishing 279 of its 614 shops by the end of this year.But Oriel said the news was disappointing, given results and numbers from other home improvement retailers such as Topps Tiles and Home Retail's Homebase.Oriel said profits could recover materially in a short space of time, but added: "Risks to forecasts remain and our 'hold' stance is under review."Another broker, Sanlam Sunrise, said it was also disappointed."We believe Carpetright is poised to benefit from an increase in UK housing transactions and prices given the historical relationship with home improvement spend, albeit with a lagged effect. However, the group needs to turn round the loss-making Netherlands operations," Sanlam analyst Amisha Chohan said.Shares in Carpetright fell 26p or 4.4% to 560.5p at 11:16 in London.PW