Carpet, flooring & homewares specialist Carpetright has seen underlying profit jump 45.9 per cent to £5.4 million despite a fall in UK sales, it has been announced today.
In the 26 weeks to October 27th 2012, total UK sales declined 1.6 per cent overall group sales fell 4.7 per cent to £227.2 million, highlighting the prolonged trading difficulties of the homewares sector.
Across the rest of Europe, sales dropped to £38.1 million, down 17.7 per cent on the same period last year while underlying profit in the region plummeted a massive 93.1 per cent.
Darren Shapland, Carpetright CEO who joined the business earlier this year, conceded that the Eurozone continues to be a complex trading area for the retailer.
He said: “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.”
However, Carpetright refurbished 58 stores over the period, which saw sales increases of over 10 per cent compared with the core business, taking its total number of stores to 92.
Looking ahead, Shapland said: ““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.”
It seems then that Carpetright’s overall performance is to be applauded considering the tough market and George Scott, Consultant at analyst firm Conlumino is positive about the retailer’s future position.
“Amid the ongoing challenges of operating in a floorings market that has been in negative territory since 2008, Carpetright’s performance is overall a positive one,” Scott said.
“While deciding against a fundamental altering of the strategic direction of what has long been viewed as a strongly run retailer, there are clear signs Chief Executive Darren Shapland is injecting some fresh thinking into the business.
“In regard to its store portfolio, Carpetright continues to review its estate in a bid to optimise its operations. During this period, its store base was reduced by a net 10 stores to 480 stores.
“Meanwhile the retailer’s refurbishment programme continued to gain pace; 58 stores were refurbished, taking the total to 92 stores.
“Coupled with investment in customer service and an enhanced online proposition, it remains well placed to gain market share as consumer interest picks up.
“In our view Carpetright’s strong leadership, positive cashflow and brand investment place it on course to effectively navigate the prevailing choppy waters and leave it well place to capitalise when the UK housing market recovers.”