A leading flooring supplies firm today gave the strongest indication yet that the housing market slump is beginning to have a knock-on effect on complementary goods.

Floor coverings giant Carpetright announced a 15.4% drop in its UK and Irish sales year-on-year with 2007.

After a demanding first quarter, the firm said it expected trading conditions to remain difficult.

However, the flooring group has indicated internal performance could improve following the implementation of operational changes.

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Operating from over 600 outlets across the UK and Ireland, today's figures have shocked industry experts.

Altium Securities Analyst David Stoddart said the results were much worse than expected.

"The first quarter last year was the strongest quarter of the year. Nevertheless, this is a disturbing sales performance from a strong market leader that we would expect to outperform the wider market," said Mr Stoddart.

The retail analyst has predicted a sharp reduction in profit forecasts for the firms, despite a projection of improved margins.

Carpetright, responding to today's figures, said European business in Poland, Belgium and the Netherlands was strengthening.

The group said sales in these regions have been boosted by 8.2%.

Last year Carpetright rejected a €1bn buyout offer, the firm was said to be considering the deal amid disappointing sales but the negotiations eventually faltered.

(PR/JM)