24th Jun 2014 07:00
LONDON (Alliance News) - Carpet and floor coverings retailer Carpetright PLC Tuesday reported a drop in revenue and a wider loss in the financial year just ended, hit by continued weakness in its Dutch business.
Carpetright posted a pretax loss of GBP7.2 million for the year ended April 26, compared with a GBP5.1 million loss the prior year.
"While indicators point to an overall improvement in UK economic performance over the past twelve months, it has been a challenging time for the group with our markets remaining highly competitive and deal-driven," said Executive Chairman Lord Harris in a statement.
On an underlying basis, which strips out exceptional items, related tax and an exceptional tax credit, the company recorded a pretax profit of GBP4.6 million, less than half the GBP9.7 million profit it saw a year earlier.
The retailer issued three profit warning during the year, and in March cut its full-year profit expectations in half from the guidance it gave in January. In March it issued a statement saying it was expecting to report an underlying pretax profit in the range of GBP3.5 million and GBP5.5 million.
Revenue during the year also declined, falling 2.2% to GBP447.7 million from the GBP457.6 million reported a year earlier, largely due to difficult trading conditions in the Netherlands, where it said the floor coverings market remains weak.
"Although there are signs that the UK economy is improving with reduced unemployment, growing levels of consumer confidence and an increase in the number of housing transactions, we continue to assume we will trade in a subdued retail environment until the recovery is clearly established," Carpetright said.
It said UK like-for-like revenues fell by 0.2%, while like-for-like sales in the rest of Europe, which includes the Netherlands, Belgium and Ireland were down 8.6%.
"The performance of the business in the rest of Europe is principally a reflection of the continued difficult trading in the Netherlands. Whilst this business reported a loss for the year, it remained cash generative," said Harris, adding that trading in Ireland also remains a drag on the group.
Carpetright said it is seeing some signs that the rate of decline in the Netherlands market is slowing, while the competitive environment in Belgium is easing. It said it has therefore revised its promotional programme to drive sales and margin, and it expects improved efficiency and reduced costs to help improve profitability in the region.
"While we anticipate trading conditions will remain challenging, we expect these actions will underpin an improvement in group performance in the new financial year," Carpetright said.
During the year, the group opened 14 stores and closed 20, giving it a total store base of 614. Total store space declined by 1.5% to 5.6 million square feet.
In a separate statement Tuesday, Carpetright said that Lord Harris of Peckham will remain as non-executive chairman until a new chairman has been appointed. It said he may remain on the board in a non-executive role even when an appointment is found.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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