Carpetright has cancelled paying a dividend for the second time after dropping into the red.

Not paying the interim dividend for the half year to 29 October follows the decision not to pay a full year dividend for 2010/2011 and saves the chain £10.8m.

A pre-tax loss of £800,000 compares with a profit of £9.8m as group sales dropped by 3.9% to £238.4m. In the UK operating profits tumbled from £11.3m to £800,000 as sales fell by 5.6% to £192.1m with like for like sales down 2.4%. Gross margins dropped from 62.3% to 58%.

'Like many other retailers we are continuing to experience a very challenging trading environment, with significant sales volatility and a corresponding decrease in the gross margin. Against this backdrop, the group has remained profitable on an underlying basis and continues to generate net cash,' says Lord Harris, executive chairman.

'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.

The development of our beds business under the leadership of a new management team presents a significant growth opportunity and the imminent launch of our improved bed offer gives us confidence in improving the group's performance in the remainder of the year. In addition, in floor coverings we will continue to offer the best prices to our customers by adapting ranges and promotional activity, whilst simultaneously working with our suppliers to reduce the level of margin investment in the second half. Finally, we shall roll out our improved laminate offer to around 200 stores by our financial year end.

'We are confident that the combination of these factors will underpin an improved trading performance for the group in the second half and our expectations for the year as a whole are unchanged.

'Although we anticipate the economic environment will remain challenging for the foreseeable future, we believe the group is in a strong position to capitalise on a strong value offer supported by a superior service proposition, when consumer demand in our sector improves.'

Meanwhile Ian Woosey, IT and e-commerce director has been made redundant after almost a decade at the chain.

'Following a review of our future requirements and an internal re-organisation, the role of group IT and e-commerce director has been made redundant,' says the group.

Woosey pioneered Carpetright's e-commerce and multi-channel initiatives and developed its online business.

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