Chief steps down as Carpetright goes wrong

The company has issued eight profit warnings in two and a half years. Now it's dragged its founder back in...

by Emma Haslett
Last Updated: 21 May 2014
Carpetright chief executive Darren Shapland has stepped down from the business after it announced like-for-like sales had dropped 2.5% in the 10 weeks to the end of September – 7.6% in the rest of Europe. Entirely unsurprisingly, shares dropped by more than 10% this morning.

The company said Shapland’s departure was nothing to do with the business’ financial state, but that he ‘can’t commit’ to the five-year tenure originally planned for him.

But there’s no ignoring the fact that Carpetright has issued eight profit warnings in the last two and a half years – for 17 months of which, ex-Sainsbury’s exec Shapland was at the helm. Hopes are now pinned to founder and chairman Lord Philip Harris of Peckham, who is returning as the company’s full-time executive chairman. If he could do it once, he might be able to do it again – but bringing a founder back is usually a sign of desperation.

The company has had a number of attempts to turn itself around: in 2009, it tried moving into the bed business but wasn’t particularly successful. At the beginning of this year, it created a ‘self help’ programme of store refurbishment. That was more helpful, but it’s still struggling.

In the style of a true mattress salesman, Lord Harris said the market remains ‘soft’.

‘While we have improved the margin and maintained a tight control on costs, the shortfall in sales in this trading period is lowering our previous expectations.’

He’s right: it’s a tough market out there, and home furnishings retailers (including Habitat, Lom Bok and Dwell) have borne the brunt of it. Carpetright will need to pull something spectacular out of its hat to stand a decent chance of recovery.
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Finance Retail

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