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Carpetright store closures see profits leap 550%

Published: 11 December 2012
Half-year results up to October 27, 2012, have revealed a profit jump from £800,000 last year to £5.4m in Carpetright's UK stores, a jump largely attributed to a net reduction of 10 stores.
Carpetright store closures see profits leap 550%
Group revenue was down 1.6% to £189.1m in the UK - a favourable comparison with the rest of Europe where it fell by 18% to £38.1m. Like-for-like sales in the UK were up by 0.7%, excluding those stores which closed this year - retail LfLs were up by 3%, but this was offset by a decline in the wholesale business. Self-help actions such as the development of Carpetright's bed proposition and the extension of its laminate range were credited for the positive results.

Gross profit percentage increased by 170 bps to 61.7%, and the 26 week period saw 58 store refurbishments. While the company opened five stores in the UK over the past half year, it closed 15 - "primarily the result of completing detailed catchment analysis which identified a small number of overlaps, where having more than one store in a town was not beneficial to profit or cashflow," said chief executive Darren Shapland.

Mr Shapland, who joined Carpetright in May, added: "The group grew underlying profits and generated cash in line with our expectations during the first half, with an encouraging increase in UK retail store like-for-like sales and a significant improvement in gross profit percentage year on year, although trading conditions in the Netherlands remained very difficult.

"Having been with the business for seven months and seen it trade through the important September to November peak has confirmed my initial view that the Group is well managed and that no fundamental shift in strategy is required. That said, we believe there are opportunities to accelerate the pace of a number of current self-help initiatives, notably the ongoing modernisation of the store estate, building customer awareness of our bed offer and further improving customer service, to enable us to grow our market share.

"While we expect trading conditions to remain challenging, we are confident that the combination of these self-help initiatives will underpin the positive momentum of the Group and our expectations for the year as a whole remain unchanged."

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