Profit alert hits DIY floor firm

Home improvers are Floors2Go's core customers

Shares in DIY flooring retailer Floors2Go have plunged 40% after a profits warning sparked by weaker UK consumer spending and house prices.

Floors2Go, which sells laminate and wooden flooring, said it expected second-quarter like-for-like sales to be 20% below the previous year.

Falling sales were "the result of a general downturn in discretionary household expenditure," it said.

Tough conditions mean operating profits could be lower than last year, it said.

Sales are expected to be lower for the second quarter in a row. They fell 2.6% in the first quarter, when compared to the same three-month period a year ago.

DIY blues

Our sales have been impacted more greatly than anticipated Simon Farnsworth, Floors2Go CEO Floors2Go share price

"Overall trading conditions remain challenging and if like-for-like sales continue at these rates, operating profits are likely to be materially lower than last year's level," Floors2Go said.

The Birmingham-based firm has a chain of 125 stores that specialise in selling flooring at discount prices.

Floors2Go says it is the UK's largest specialist retailer of wood and laminate flooring.

However, it appears it have become the DIY home improvement sector's latest casualty.

B&Q-owner Kingfisher reported a 15.6% profit fall for the three months to 30 April 2005, after sales declined at the DIY chain.

Floors2G said its margins were improving, and it was looking to cut costs through improved warehouse facilities and stock control.

Meanwhile, new product ranges are planned for the start of the peak summer trading season, and it expects to reach its target of opening 25 new stores in 2005.

Floors2Go began as a family business in 1999 and expanded rapidly, first in the Midlands and the north of England and more recently in London and the South East.

In 2004, the founding family sold the company, which then floated its shares on the London Stock Exchange's AIM index for small companies.

Shares fell across the DIY sector after Floors2Go's profits warning. Topp Tiles dropped 4.3%, kitchens and bathrooms group MFI lost 2.8%, Carpetright fell 1.5% and Kingfisher 1.4%.

Floors2Go's shares were down 23 pence at 30.5p in early afternoon trading.