Carpetright has issued its third profit warning in six months, after failing to generate any improvement in its fortunes from the reviving UK housing market.
The UK's largest floor-covering retailer also said it had been hit by "extremely difficult economic conditions" in the Netherlands, where it has 15% of its 620 stores.
Pre-tax profit for the year ending 26 April is expected to be £3.5m-£5.5m, the company said on Wednesday in a trading statement – well below analysts' forecasts of £7.8m.
Carpetright shares were down by more than 5% to 556p on Wednesday, a small recovery after an 8% fall on market opening.
In the UK, like-for-like sales were flat in the eight weeks to 22 March, despite an upturn in the housing market and floods that devastated a swath of the country. Sales in the company's stores in the Netherlands, Belgium and Ireland were down 5.3% on last year.
Lord Harris, the founder and executive chairman of Carpetright, who returned to a full-time role in 2013, said: "Based on previous experience we had expected to see some recovery as UK housing transaction volumes improved. In the event, this has yet to materialise and the momentum established in the third quarter was not sustained.
"With the important Easter trading period still to come, we are continuing to concentrate on a range of self-help measures as we seek to improve the group's performance."
Carpetright's performance looks even more threadbare set against that of Topps Tiles, which on Tuesday reported a 12% increase in revenues in the 26 weeks to the end of March. The UK's largest tile retailer said it was on course to increase half-year pre-tax profits to £8m from its 313 stores, compared to £4.7m the previous year.
Sanjay Vidyarthi, head retail analyst at Liberum, said Carpetright's problems lay in its business rather than the wider economy. "Carpetright probably has too much space in the UK relative to the size of the market and some of its stores are expensive. My sense is that they have lost market share," he said, although he added that a lack of data meant it was "difficult to quantify the strength of the competition".
Disappointing sales are only the latest setback for Carpetright, which along with four other flooring and furniture retailers promised to clean up its pricing after reaching a settlement with the Office of Fair Trading on misleading promotions.
Nick Worthington, the former boss of the bed retailer Dreams, has been drafted in to take charge of Carpetright's European business, as the company continues to shake up its management team.
Last October, Darren Shapland left his job as chief executive after only 18 months in the job. Harris stepped into the job of full-time chairman, having led the company since founding it in 1988.