Carpetright - interim results show Group revenue declined by 3.9%

Carpetright plc, Europe’s leading specialist carpet and floor coverings retailer, today announces its interim results for the 26 week trading period to 29 October 2011.

Headlines

Group
• Total Group revenue(1) declined by 3.9% to £238.4m (2010: £248.0m)
• Underlying(2) operating profit of £3.7m (2010: £12.6m)
• Underlying(2) profit before tax of £1.4m (2010: £10.0m)
• Underlying(2) earnings per share of 1.2p (2010: 10.7p)
• No interim dividend is being declared (2010: 8.0p)
• Net debt reduced by £10.7m to £55.0m during the first half

Statutory
• Loss before tax of £0.8m (2010: profit of £9.8m)
• Basic loss per share of 0.9p (2010: 10.4p profit)

UK
• Total revenue(1) declined by 5.6% to £192.1m (2010: £203.4m), with like-for-like sales3 down 2.4%
• Gross margin reduced by 430 basis points to 58.0% (2010: 62.3%), reflecting higher levels of promotional discount and increasing proportion of beds in the sales mix
• Total costs down by £4.8m, a 4.2% reduction in the first half
• Underlying(2) operating profit of £0.8m (2010: £11.3m)
• Store base reduced by a net 36 during the first half to 503 stores

Rest of Europe
• Total reported revenue(1) increased by 3.8% to £46.3m (2010: £44.6m), in local currency this was a decline of 0.9% with like-for-like3 sales down by 0.3%
• Underlying(2) operating profit of £2.9m (2010: £1.3m)
• Head office operations consolidated, saving £0.5m per annum
• No net change in store numbers during the first half

Commenting on the results, Lord Harris of Peckham, Chairman and Chief Executive, said:

“Like many other retailers we are continuing to experience a very challenging trading environment, with significant sales volatility and a corresponding decrease in the gross margin. Against this backdrop, the Group has remained profitable on an underlying basis and continues to generate net cash.

“With the consumer environment expected to remain difficult, we are focusing on those opportunities that are under our direct control. We have reduced our total cost base in the first half and will continue to take a determined approach to reducing this further. The development of our beds business under the leadership of a new management team presents a significant growth opportunity and the imminent launch of our improved bed offer gives us confidence in improving the Group’s performance in the remainder of the year. In addition, in floor coverings we will continue to offer the best prices to our customers by adapting ranges and promotional activity, whilst simultaneously working with our suppliers to reduce the level of margin investment in the second half. Finally, we shall roll out our improved laminate offer to around 200 stores by our financial year end.

“We are confident that the combination of these factors will underpin an improved trading performance for the Group in the second half and our expectations for the year as a whole are unchanged.

“Although we anticipate the economic environment will remain challenging for the foreseeable future, we believe the Group is in a strong position to capitalise on a strong value offer supported by a superior service proposition, when consumer demand in our sector improves.”

Notes
1. All sales figures are quoted after deducting VAT.
2. Underlying’ excludes exceptional items and related tax.
3. Like-for-like sales calculated as this year’s net sales compared to last year’s net sales for all stores that are at least 12 months old at the beginning of our financial year. Stores closed during the year are excluded from both years. No account is taken of changes to store size or introduction of third party concessions. Sales from insurance and house building contracts are supplied through the stores and included in their figures.

Full presentation available in Industry Articles section (www.insightdiy.co.uk/articles.asp).

Source : Carpetright PLC
www.carpetright.plc.uk/investors/results-presentations