Carpetright: Revenue Declines By 15.7% As Restructuring Process Continues

Carpetright has published its Interims Results Announcement for the 26 weeks ended 27 October 2018, stating that its restructuring programme is on schedule and in line with management expectations.

Excerpts from the statement follow and you can download the full results here.

Strategic progress

 In a transitional year, on track to deliver £19m annualised cash savings:

o Legacy property issues being addressed with 65 underperforming UK stores closed in the period

o Implementation of restructuring activity reducing the Group’s overhead costs

 In the UK, average store lease length has been reduced to 3.5 years, with 52% having an option to break within two years, providing further flexibility to reduce store size and/or relocate in a fast changing retail environment

 Refurbished stores continue to outperform the uninvested estate

 Strengthened product ranges across all categories, particularly hard flooring with launch of own brand laminate and luxury vinyl tile ranges

 Further investment in digital technology to improve both the online and in-store experience with planned implementation in Spring 2019

Financial Headlines

Group

 Group revenue decreased 15.7% to £191.1m (H1 FY18: £226.6m)

 Underlying EBITDA loss of £1.7m (H1 FY18: profit of £8.6m)

 Statutory loss before tax of £11.7m (H1 FY18: loss of £0.6m)

 Period end net debt of £12.4m (Year end 28 April 2018: net debt of £53.0m) reflecting:

o Proceeds received from June’s equity issue

o Tight management of working capital and capital expenditure

o Implementation of restructuring activity

o Headroom in bank facilities of £58.8m

UK

 Like-for-like sales declined 12.7% over the half but with a marked sequential improvement, with the second quarter down 8.9%, this followed a 16.8% fall in the first quarter which reflected the challenges around stock availability, negative sentiment associated with the restructuring process and weak consumer demand

 Underlying EBITDA loss of £2.1m (H1 FY18: profit of £8.4m)

Rest of Europe

 Following management changes, like-for-like sales increased by 0.5% (H1 FY18: growth of 6.5%) - a significant improvement from the decline experienced in the second half of the previous financial year

 Underlying EBITDA of £0.4m (H1 FY18: £0.2m)

Commenting on the results, Wilf Walsh, Chief Executive, said:

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

Source : Insight DIY Team

For all the very latest news and intelligence on the UK's largest home improvement and garden retailers, sign up for the Insight DIY weekly newsletter.