Carpetright sales improve in second quarter - UPDATE
Presenting its first trading update under new chief executive Wilf Walsh, carpet retailer Carpetright saw trading improve in the second quarter, with like-for-like (LFL) sales ahead of the first.
Carpetright
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16:35 22/01/20
The first 11 weeks of the second quarter saw UK LFL sales up 7% versus the 6% growth in the first quarter.
After UK gross margin declined by 260 basis points in the first three months of the year, full year gross margin guidance for a decline of 50-100 basis points was reiterated, which analysts said implied an easier underlying pricing environment.
"In the UK our continued focus on effective promotional activity has delivered solid sales growth throughout the period, with like-for-like growth broadly in line with the level experienced in the first quarter," Walsh said.
The rest of the Europe, which represents around 16% of expected sales, also stabilised, the Netherlands business in particular. With currency headwinds still a factor, a LFL sales decline of 0.5% was still a big improvement on the 3.6% fall in the first quarter.
"We expect this, along with an improvement in gross profit margin and a reduction in operating costs, will result in our businesses in the Netherlands and Belgium to be profitable for the first half of the financial year compared to the trading loss experienced in the prior year," Walsh added.
"Trading in the year to date remains in line with management's expectations and our view for the year as a whole remains unchanged."
During the period, six stores were opened and 10 closed, giving a net reduction of four. There are now 463 stores trading, of which 290 have been modernised.
Broker Peel Hunt said the business appeared to have "turned a corner" as it moved towards peak autumn trading, giving analysts the confidence to upgrade forecasts.
"Better trading will also help to sooth concerns regarding the speed and scale of management change at both board level and across the divisional heads."
The spread of full year spread of forecasts among brokers is wide, ranging from pre-tax profits of £8.4m all the way up to £18m.