Connect with us

Featured

Carpetright losses widen as ‘negative headlines’ hit sales

Published

on

Struggling retailer Carpetright has slipped to a half-year loss of £11.7m after it closed dozens of stores and said “negative headlines” had hit sales.

The group said profit margins were squeezed as it saw fewer shopping visits and was forced to cut prices amid fierce competition.

But it said it was now on the first stage of a return to profitability, after a six-month period to 27 October which saw it axe 65 outlets. Shares climbed 10%.

Carpetright said like-for-like sales in UK stores were down by 12.7% over the period but that there had been a marked improvement in the second quarter, when they fell 8.9%, compared to the first, when they dropped by 16.8%.

The company’s half-year losses widened compared to the same period last year when it was in the red by £600,000.

Chief executive Wilf Walsh said “negative headlines” had affected the confidence of customers of the store, who are asked to leave deposits before deliveries, but that a marketing campaign had improved perception of the brand.

He added that the company had also been affected by stock problems after the withdrawal of credit insurance by some providers.

But he said Carpetright was now “moving closer to the terms we enjoyed with the majority of our suppliers” prior to launching its rescue plan.

“This is a transitional year for Carpetright as we work through our restructuring plan,” Mr Walsh said.

“We remain on 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.”

Carpetright said in April that it was to close 92 stores, resulting in 300 job losses, under a Company Voluntary Arrangement (CVA) – a form of insolvency aimed at protecting a business from going bust by cutting its costs.

It was trading from 345 locations in the UK at the end of the latest half-year period, having axed a total of 73 over the previous year.

Mr Walsh said: “The store closure programme has been extensive along with, regrettably, a number of redundancies in both store and our head office as we re-base the business in line with the reduced store estate.”

He pointed to 11 stores expected to close in the second half of the financial year.

There were 25 sites which had continued to trade without paying rent, where landlords had opted to allow Carpetright carry on paying business rates and avoid an empty unit on their retail park.

Advertisement Find your dream job

Trending