Carpetright, seen as a lead indicator on the health of the UK consumer economy, today warned on its full-year profits.

It said that sales in the key post-Christmas period were significantly below expectations. 

Shares in the firm, which has 21 stores here, plunged over 40% in London trade today.

Carpetright's fortunes are closely tied to the strength of the UK housing market and the firm is regarded as a useful economic indicator as traditionally it has been "first in, first out" of a recession. 

Its warning adds to evidence that UK consumers, under pressure from slow wage growth, compounded by higher inflation in the wake of the 2016 referendum vote to leave the EU, are tightening their belts. 

Company trading updates and survey data published this month have shown Britons cut back on almost everything other than food purchases in the run-up to Christmas. 

Carpetright, which trades from 416 UK stores, said like-for-like sales in its home market fell 3.6% in the 11 weeks to January 13. 

Like-for-like sales in the core flooring category fell 7.1% in the post-Christmas period.

The company said UK trading was impacted by lower customer footfall, with transaction numbers down significantly year-on-year.

"While average transaction values were up year on year, the number of customer transactions since Christmas was sharply down, which we believe is indicative of reduced consumer confidence," the company's chief executive Wilf Walsh said. 

Carpetright cut its full 2017-18 year underlying pretax profit guidance to a range of £2-6m. Previously analysts' average forecast was £14.1m. 

The firm reported profits of £14.4m in 2016-17.