Carpetright today said that a proposed refinancing – and possible acquisition – by its chief lender would help it to continue to invest in stores and in its digital platform.
It wants to improve efficiency and online opportunities through upgrading its IT infrastructure, while working with new partners including Furniture Village in order to reach more customers at a lower cost. It also wants to optimise its store estate by closing and relocating some stores in order to reduce costs further.
The carpets-to-flooring retailer expects to spend as much as £25m on these measures and on marketing, training staff and developing its operations in continental Europe following a proposed refinancing and possible acquisition by its lead lender Meditor European Master Fund. It says that it needs £80m in total, to cover this investment, provide working capital and pay debts of £25.7m which fall due at the end of this year.
It also plans to use new funding for longer-term investment including developing its distribution model, improving its sourcing and looking at possible acquisitions. However, while shareholders owning 24% of the company – Meditor owns a further 34.3% – have said they would accept an offer in principle, there is no certainty as yet that an offer will be made.
Carpetright chairman Bob Ivell said: “Shareholders will be aware that we have been engaged in comprehensive refinancing discussions to replace existing facilities which expire at the end of this calendar year. The possible offer being announced today would put in place a new financing structure for Carpetright which would enable us to continue our recovery and make necessary investments in improving our business.”
Today the retailer, ranked Top250 in IRUK Top500 research, said that Carpetright was performing well despite intense competition in its sector. It said that profitability was improving as stores become more efficient and costs are cut.
It now aims to expand its digital business as well as its sales of hard flooring. It said that managing supplier terms had been “challenging” but that it continued to work well with its supply chain partners.
In a trading statement, Carpetright said: “The company’s average sales per store ratio have improved in recent periods as the prolonged sales decline appears to be bottoming out; however, in the present UK economic climate, the board remains cautious. In H1 FY20, LFL sales growth has been achieved in all territories, however the ongoing impact of negative consumer confidence and Brexit on the current retail environment could present a challenge in the balance of the financial year.”
Image courtesy of Carpetright