UK: Carpetright returns to UK sales and profit growth
- Credit: PA
Carpetright today gave a cautious welcome to signs of life in the housing market as it confirmed its return to underlying profits growth after turnaround in UK sales.
The flooring coverings chain, which has 478 stores across the UK, said “self-help” measures helped underlying pre-tax profits more than double to £9.7million from £4m a year earlier.
It gave a tentative cheer to recent improvements in the property market, which in turn would be expected to boost demand for carpets, rugs and flooring.
But the group said it was too early to call a wider economic recovery and warned it expected conditions to remain “challenging”.
Bottom-line results also showed the impact of a near-£15m hit as it took writedowns on properties and leases, sending the group into the red on a statutory basis, with pre-tax losses of £5.1m in the year to April 27 from £13.5m profits the previous year.
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Led by chief executive Darren Shapland, who took over from veteran boss Lord Harris of Peckham last year, Carpetright has seen UK like-for-like sales turn positive, up 2.2% over the past year, boosted by store refurbishments, improved product ranges and increased digital marketing.
Mr Shapland said: “The success of our self-help activities in improving group performance during the period was particularly encouraging, demonstrating that a focus on factors within our control can yield good results.
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“While we expect trading conditions to remain challenging, we are confident that the combination of these self-help initiatives will underpin the positive momentum.”
The underlying profit improvement comes after a tough few years as crashing consumer spending has eroded sales and profits.
Carpetright has been revamping outlets and reviewing the locations of its store estate.
It has modernised 186 stores so far under the programme and said sales had risen by more than 10% in updated outlets.
The group is also building on its “Sleeping by Carpetright” bed range, which is now trading from 271 stores and accounts for 6.7% of total UK sales.
But results revealed ongoing woes in its European arm, where it trades from 142 stores.
Difficult conditions in the Netherlands sent European like-for-like sales slumping by 11%.
Kate Calvert, retail analyst at Cantor Fitzgerald said: “The actions taken by management have stabilised the business with sales and profits now moving in the right direction.”