30th Jun 2015 13:24
LONDON (Alliance News) - Carpetright PLC Tuesday said it made a profit in its recently-ended financial year, having suffered a loss the prior year, as revenue growth in the UK offset a decline in the rest of Europe but like-for-like sales rose in both divisions, and it said it is continuing with its store repositioning plans.
Shares in Carpetright were trading up 6.0% at 625.00 pence Tuesday afternoon.
The carpet and floor coverings retailer reported a pretax profit of GBP5.4 million in the 52 weeks to April 25, after making a GBP7.2 million loss the year before, which it said was driven by revenue increasing 3.3% to GBP462.6 million from GBP447.7 million. Sales were up 5.4% in the UK but down 7.4% in the rest of Europe, but like-for-like sales in the UK and rest of Europe rose 7.3% and 0.3%, respectively.
In the 53 weeks to May 2, the company said it made a pretax profit of GBP6.6 million on GBP469.8 million in revenue.
Carpetright said that the flooring market remained weak in the Netherlands and Belgium but that improvements in a "number of economic indicators", such as rising housing transactions in the Netherlands, give grounds for "cautious optimism" for the future. Consumer confidence in Ireland has also risen, it said.
Shore Capital analyst Clive Black said that Carpetright's GBP462.6 million revenue slightly beat the broker's expectations of GBP461.2 million, although the 7.3% UK like-for-like sales growth was below its forecast of 7.7%.
"Strategically, we are confident that the business continues to make progress, with the store rationalisation plan well under way and a net reduction of 12 stores in the UK. We have stated previously that we believe the real benefit of this will be felt in the medium to long term as a significant number of UK store leases are due for renewal with the next five years," Black said.
Carpetright has been repositioning its store portfolio in order to reduce total square footage, eliminate store catchment overlap, improve the quality of the estate by relocating to better sites, and reduce property costs. It opened 15 stores in the period and closed 32, and now operates 460 stores in the UK and 137 in the rest of Europe.
"Our target is a combination of a geographic store portfolio and a digital offer that provides a streamlined, cost-effective solution to enable all customers to access the Carpetright brand. This will also include new store openings in locations where we are under-represented," the company said.
Carpetright added that like-for-like sales in the eight weeks to June 27 were up 4.9% in the UK and 7.4% in the rest of Europe, on a local currency basis.
"While this is just the beginning of the journey to transform Carpetright, we have a clear direction and the positive results we are seeing from a number of our initial activities give us confidence that we are on the right path," Chief Executive Wilf Walsh said in a statement.
Carpetright will not pay a dividend for the full year and said that cash will be used to accelerate activity to reduce fixed occupancy costs and to invest in stores. "That said, if we maintain our current progress the board would look favourably on restoring the dividend in due course," the company said.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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