Carpetright records a fall in first-half sales and profits

Carpetright reported group underlying pre-tax profits fell 33.3% year on year to £3m in the 26 weeks to October 26.

Underlying operating profit in the UK rose 5.8% to £5.5m but was offset by a slump in its European arm from a £200,000 profit last year to a £1.4m loss.

The floorings specialist reported UK like-for-likes fell 0.8% and were flat excluding its contracting wholesale arm but in Europe like-for-like sales fell 8.6%.

Total group sales decreased by 2.2% to £222.2m as sales in its UK arm fell 2.2% to £185m and a decline of 2.4% in the rest of Europe led to sales of £37.2m.

The retailer said continued difficult trading conditions in the Netherlands, where the floor coverings market remains weak, was to blame for the European performance. 

Carpetright modernised a further 38 UK stores during the half and has converted 224 stores of its 474 shop estate.

Carpetright founder Lord Harris, who stepped back from the day-to-day running of the business last year, replaced chief executive Darren Shapland after his shock departure in October. Harris is now leading the business as its executive chairman.

Harris said: “Against a backdrop of volatile trading conditions, our first-half performance reflects an improvement in profits in the UK, driven by the continued success of our self-help initiatives, offset by a move into loss in our Rest of Europe business, primarily from a continuation of very difficult trading conditions in the Netherlands.

“Historically, the trend in UK mortgage approvals has been a useful lead indicator of consumer demand in our sector, bearing a positive correlation with floor covering sales. Approvals began to show encouraging signs of improvement during the first half, although this is from a very low base by historic standards.”

He added: “In the past, we have seen a lag of about six months before the impact of a change in the mortgage approval trend has been reflected in our sales.”

Harris said he expects trading conditions to remain “challenging” in the second half but expects an improvement in performance due to the retailer’s “self-help initiatives”.