Carpetright warned over profits for the third time in six months yesterday after admitting it has yet to benefit from the UK's housing market recovery.
The floor coverings retailer said signs of improvement reported earlier this year had tailed off to leave UK like-for-like sales flat in the eight weeks to last Saturday, compared with the 1.9% improvement seen in January.
Shares dived 8% after the company said underlying profits for the year to the end of April will be in the range of £3.5m to £5.5m, against £9.7m a year earlier.
Cantor Fitzgerald retail analyst Freddie George slashed his profits forecast to £4.5m from £8.5m in the wake of yesterday's update.
He added: "We continue to believe that the company's conforming format is not effective enough against the independents. It is too focused on price, in our view, and not aspirational enough for mainstream customers."
As well as the slow recovery in the UK, Carpetright has continued to face difficult trading conditions in the Netherlands, which is the company's second biggest market with 95 stores.
Executive chairman Lord Harris said: "In our last trading statement, we reported that like-for-like sales in the UK were volatile, and this remains the case.
"Nevertheless, based on previous experience we had expected to see some recovery as UK housing transaction volumes improved.
"In the event, this has yet to materialise and the momentum established in the third quarter was not sustained," he said.
Lord Harris, a retail industry veteran, made a dramatic return to the helm after the shock departure of chief executive Darren Shapland last October.
He added: "With the important Easter trading period still to come, we are continuing to concentrate on a range of self-help measures as we seek to improve the group's performance."
Like-for-like sales in Carpetright's division covering Holland, Belgium and Ireland fell by 5.3% in the eight weeks, widening to an 8.5% dip when including currency movements.
The company recently appointed former Dreams chief executive Nick Worthington as operations director for Europe.