Carpet retailer optimistic despite 28% fall in profits
Challenging economic conditions have left their mark on retailer Carpetright after the flooring chain reported a 28% drop in half-year profits.
The business, which has 584 stores in the UK and Ireland, added it remained cautious about conditions over the rest of this financial year and into 2011 after sales fell 4% to £248m in the six months to October 30.
Despite the slide in underlying profits to £10m, the chairman and chief executive, Lord Harris of Peckham, said Carpetright remained in a good position to deliver strong sales growth when demand in the sector returns.
Total revenues in the UK and Ireland declined by 2.7% to £207.6m, with the figure down by 6.1% on a like-for-like basis. Underlying operating profits in the UK and Ireland fell by a third to £9.6m, it added.
As well as fragile consumer confidence, Carpetright said sales of big-ticket, housing-related items were impacted by a low level of mortgage approvals.
The company, which opened 17 new stores and closed 19 sites in the UK and Ireland during the half year, said it believed there were still opportunities to open more stores, particularly in densely populated areas.
And it has continued to roll out beds company Sleepright, which now trades from 176 Carpetright stores.
Carpetright's 118 stores in the Netherlands and Belgium saw total sales decline 2.4% in local currency terms to £40.4m.
Like-for-like sales were down 2.9% as the opening months of the period were impacted by hot weather and the distraction caused by the success of the Dutch football team at the World Cup.
There was an improvement in the second quarter and Carpetright pointed out that the overall market declined by an estimated 5% in the half year.
Matthew McEachran, a retail analyst at Singer Capital Markets, said the firm's figures were in line with expectations, although he highlighted concerns about the impact of recent weather conditions on trading figures.
He added: "We expect the snow to have had an adverse effect and whether or not this can be clawed back over the peak trading season remains to be seen."