Carpetright is closing stores and investing in digital technology both for online and in-store shoppers as it looks to rebalance its business for the future. The flooring-to-beds retailer, ranked Top350 in IRUK Top500 research, reported a 15% fall in sales and pre-tax losses of £11.7m halfway through what it says is a transitional year for the company.
Carpetright reported revenues of £191.1m in the half-year to October 27. That’s down by 15.7% on the same period last year in total, or by 12.7% on a like-for-like basis, that strips out the effect of store openings and closures. The retailer said that its sharpest fall in sales came in the first quarter (-16.8%) as it reported challenges both with stock, as suppliers found it harder to find credit insurance, and with sales, as already hard-pressed consumers were concerned about putting down deposits on carpets. In the second quarter, sales were down by 8.9% on last year.
Pre-tax losses came in at £11.7m, down from a loss of £0.6m at the same time last year.
Carpetright chief executive Wilf Walsh said: “ This is a transitional year for Carpetright as we work through our restructuring schedule and are confident that this activity is already starting to yield benefits. This is the first stage in returning the group to sustainable long-term profitability.”
The retailer closed 65 “underperforming” stores during the period through a CVA (company voluntary arrangement). They include 54 stores designated as worst-performing ‘category C’ stores – a further 25 stores in this category are now trading rent-free where landlords preferred to have the retailer pay the business rates due on the store and to have a trading store in their retail park. A further 11 ‘category B’ stores have closed where landlords opted to take back the lease, and a further nine stores in this category are expected to close in the second half. Currently, Carpetright trades from 345 UK stores, down from 418 at the same time last year, of which 52% now have an option to break the lease within two years. Some 188 stores are now trading under a new Carpetright brand, although the retailer has now paused its store refurbishment programme until the future shape of its estate becomes clearer.
Carpetright is now investing in digital technology that will “improve both the online and in-store experience”. That’s set to go live next spring. Few details of those technologies were given in today’s statement, but chief executive Wilf Walsh said: “I am excited about the transformational effect this will have on sales and service.”
Carpetright said consumer spending and confidence remained concerns for any retail business in the current climate, as did the uncertainty around Brexit.”However,” said Walsh.” We believe that as market leader and having taken decisive action to reduce our cost base significantly, we are structurally best placed in the floor coverings sector to deal with the challenges these headwinds might present and return the business to sustainable long-term profitability.”
Carpetright currently trades from 133 stores in Europe, in the Netherlands, Belgium and the Republic of Ireland. The European business saw like-for-like sales improve by 0.5% in the half-year while underlying earnings doubled to £0.4m.
Image courtesy of Carpetright