A surprise profit warning and Chief Executive Officer (CEO) exit at Carpetright send the FTSE 250 plunging on Friday afternoon, dragging the general retail sector lower in London.
Carpetright announced the departure of CEO Darren Shapland as it warned falling sales meant full-year profits would be "significantly" below its previous expectations. The carpet retailer said founder and Chairman Lord Harris of Peckham would take control and become full-time Chairman.
The company reported that underlying sales in the UK were down 2.5% in the 10 weeks ending September 29th. They were down 7.6% in the rest of Europe in local currency terms driven by weakness in its Dutch business, which is now expected to be loss-making in the first half.
The stock was down 7.91% at 620.23p by mid-afternoon.
Richard Curr, Head of Dealing at Prime Markets, said that Carpetright has confounded its critics "year in and year out", staging a recovery following numerous profit warnings in recent years.
He said: "The retailer is clearly ideally placed to benefit from a likely new boom in the housing market, and the prompt action by the effervescent Lord Harris to address the departure of Darren Shapland by re-appointing himself as full time director will certainly limit the damage."
However, he warned that in the short term, the stock has fallen well below its 100-day and 200-day moving averages "with no other technical 'furniture' to act as a brake".
Prime Markets expects the share price to re-tests the year-low reached in July of 573p in the coming weeks.
Kingfisher, the DIY retailer which owns the B&Q and Screwfix brands in the UK, was another casualty of the day on Friday, suffering heavy losses before the close. The stock has been under heavy selling pressure since the release of its interim results on September 11th after it reported a 0.8% in like-for-like sales in the first half (at constant currency) and a 1.6% drop in adjusted pre-tax profits.
The stock has hit a 52-week high of 420p on September 10th but has since fallen by nearly 11%. It now trades at levels not seen since the start of July.
Debenhams, M&S and Halfords were also suffering losses today.
Bucking the trend were electrical retailer Dixons and Argos and Homebase owner Home Retail after UBS upgraded its ratings for both stocks from 'neutral' to 'buy'.
The Swiss bank said that the two companies would be "likely beneficiaries" of improving conditions in the UK retail market.
Top performing sectors so far today
Automobiles & Parts 8,197.26 +1.77%
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Industrial Transportation 3,056.39 +0.94%
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Construction & Materials 4,124.01 +0.51%
Bottom performing sectors so far today
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Oil Equipment, Services & Distribution 23,322.30 -0.89%
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Personal Goods 25,750.38 -0.76%