Carpetright sales and profits impacted by competitive market and weak pound
Carpetright has reported a 3.8% decline in first half revenue to £222.3 million as like-for-like sales in the UK fell by 2.9%.
The group said the drop in UK like-for-likes was a reflection of uneven consumer demand in an increasingly competitive market.
In the six months to 29 October, the group’s pre-tax profit was £4.1 million compared to £7.1 million in the same period a year earlier. Underlying pre-tax profit declined to £5 million from £9 million previously.
In Carpetright’s Rest of Europe business, like-for-like sales fell by 1.5% in local currency. However, there was an improvement in underlying operating profit to £1.1 million from £0.6 million a year ago.
Underlying operating profit in the UK was £4.8 million compared to £9.4 million in the first half of the previous year.
Wilf Walsh, Carpetright chief executive, said: “We have had a challenging first half – the full impact of the UK decision to leave the EU remains unclear; consumer demand remains uneven; the market is extremely competitive and the impact of currency movements have combined to give us substantial trading headwinds. To address these challenges and revitalise the business, we have a programme of activities underway, but these will take time to deliver their full effect.”
At the end of the first half, Carpetright had 49 UK stores trading under its new brand identity, delivering sales growth above comparable stores in the rest of the estate. The retailer is planning to accelerate the programme to 150 stores by the end of the year, which is 50% more than the original target and over a third of the UK estate.
Carpetright said sales were benefiting from a strategic focus on hard flooring, a category achieving double digit growth
The company is continuing to make progress in reducing the number of underperforming stores with a net six closures taking the UK estate to 429 stores.
In the Rest of Europe, whilst the number of stores remained unchanged at 137, the trading space has been reduced by 3.2%.
Looking at current trading, Carpetright said it has made a good start to the second half with like-for-like sales in the UK up 2.6% in the six weeks to 10 December. Like-for-like sales in its Rest of Europe business have risen by 5.9% on a local currency basis over the same period.
Walsh added: “We have made an encouraging start to the second half with a return to like-for-like sales growth in both businesses. As we enter the important January trading period, we remain comfortable with the range of market expectations. Looking longer term, we are confident that our plan to build on Carpetright’s strong foundations, to modernise the business and to ensure we capitalise as market leader to the full is still on track.”