Carpetright profit drop prompts supplier squeeze

14 December 2011

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14 December 2011 | Angeline Albert

Carpetright's pre-tax half-year profits have fallen by £8.6 million, prompting the group to start price-cutting talks with suppliers.  

The flooring retailer’s interim results for the half-year up to 29 October revealed pre-tax profits dropped to £1.4 million, down from £10 million in 2010, following a tough trading environment.

In response, the company said it is in talks with suppliers across its supply base to lower prices, a move which is a major focus of its cost-cutting drive.      

Carpetright has 93 leases on buildings up for renewal during the next five years and was looking to renegotiate leases or move stores to buildings with more favourable lease conditions.         

Lord Harris of Peckham, chairman and chief executive, said: “With the consumer environment expected to remain difficult, we are focusing on those opportunities that are under our direct control. We have reduced our total cost base in the first half and will continue to take a determined approach to reducing this further. In floor coverings we will continue to offer the best prices to our customers by adapting ranges and promotional activity, while simultaneously working with our suppliers to reduce the level of margin investment in the second half.”

The company would not outline the extent of savings it hopes to make from the supplier talks.

Difficult trading conditions led to the group’s poor financial performance despite the price of oil-based raw materials used in flooring falling as a result of lower oil prices.

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