Carpetright posts drop in full year profit
Carpetright has reported a decline in full year profit after battling against new entrants to its market and the fall in the value of sterling.
In the year to 29 April, underlying pre-tax profit fell by 21.3% to £14.4 million which was in line with market expectations. Statutory profit was down 93% to £0.9 million.
Meanwhile, group revenue increased slightly to £457.6 million from £456.8 million in the previous year.
The company said it saw a significant improvement in performance in the UK in the second half of the year after a “difficult” first six months. UK like-for-like sales in the second half increased by 1.8% which partially mitigated a decline of 2.8% in the first half, to give a full year decline of 0.5%.
Underlying operating profit in the UK was £10.7 million compared to a previous £17.8 million with the reduction reflecting sterling depreciation impact and margin effect of measures to address increased competition.
In Carpetright’s Rest of Europe business, like-for-like sales growth was 2.5% compared to 4.8% in the previous year. However, there was an improvement in underlying operating profit to £5.7 million from a previous £2.5 million.
During the year, Carpetright accelerated its store refurbishment programme which meant 47% of the UK estate was trading under the new brand identity by the period end. The company said it is on track to complete the remainder of UK estate by the end of 2018.
Wilf Walsh, Carpetright chief executive, said: "I am pleased to report on a year of significant strategic progress, as we implemented a wide-ranging programme of investment and operational change, to refresh and update the Carpetright brand. Our strategy is on track and the positive response we have received from these initiatives has encouraged us to press ahead with plans to complete the refurbishment of the UK store estate by the end of 2018 and to extend the programme in the Rest of Europe.”
Looking at current trading, Carpetright said it had made an "encouraging" start to the new financial year despite continued economic uncertainty.
UK like-for-like sales grew by 2% in the seven weeks to 17 June with the refurbished stores continuing to outperform the un-invested estate. In the Rest of Europe business, like-for-like sales were down 1.2% on a local currency basis over the same period, reflecting the calendar shift of public holidays and a disruption effect of refurbishing stores.
Walsh added: "We have made an encouraging start to the new financial year, underpinned by the improving performance of our refurbished UK estate. While a challenging consumer environment and competitive landscape remain headwinds, we are confident the additional potential in our self-help initiatives will support an increase in market share."
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