Carpetright profits collapse after exceptional charge linked to store closures
Retailer Carpetright has seen profits collapse after UK sales dipped and it booked a hefty exceptional charge linked to store closures.
The company said that pre-tax profit plummeted 93% to £900,000 in the year to April 29, down from £12.8 million.
Exceptional costs, linked to closing loss-making stores, totalled £13.5 million.
Overall revenue, which includes its European arm, was broadly flat at £457.6 million, but UK sales fell 2.6% to £381 million.
Chief executive Wilf Walsh 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.
"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."
Like-for-like sales in the UK fell 0.5%, but Carpetright said that it bounced back in the second half of the year.
The firm added that it has made an "encouraging start" to the new financial year, despite "continued economic uncertainty".
UK like-for-like sales grew by 2% for the seven weeks to June 17.
Mr Walsh added: "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.
"We have made an encouraging start to the new financial year, underpinned by the improving performance of our refurbished UK estate."
Carpetright shares rose more than 8% to 194.5p as investors took a "glass half full" view of the results.
Neil Wilson, senior market analyst at ETX Capital, said: "Like for like sales at stores that have been refurbished are up 5% - a very encouraging sign that the programme is working.
"Investors are seeing this as a glass half full.
"But doubts remain with the stock down a fifth since April. Carpetright has suffered a serious decline since last June as investors shy away from companies whose chief exposure is to UK consumers.
"Any turnaround has to be viewed in the context of a very tough market that might get tougher yet as inflation climbs and wages fail to keep pace."