Floorings giant Carpetright has reported rising interim profits as its modernisation strategy bore fruit. This is what the analysts said.

“It has been another six months of progress for flooring specialist Carpetright, which has seen its ongoing investment and strategy behind the scenes begin to bear fruit.

“Carpetright has been continuing to instigate its strategic plan to update its proposition and broaden its appeal. As part of this, the retailer is trialling refreshed branding at some branches, while it has also opened four concept stores that aim to ’encourage experimentation, sampling and discovery’. This shift to a more interactive, boutique format is similar to that of Topps Tiles, recognising the more engaged approach expected by today’s flooring shopper.

“This is an altogether pleasing set of results for Carpetright, which was effectively forced into reassessing its proposition because of difficult and unsustainable trading conditions. While wider trading conditions are still somewhat unpredictable, the retailer is now emerging as a more forward-thinking, leaner business. This should ultimately make itself more attractive to today’s flooring and beds shopper.” – Greg Bromley, Conlumino

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“The interim results were better than our expectations despite a decline in the gross margins due to lower than forecast rental charges.

“The strategy being implemented by Wilf Walsh is credible but is not enough, in our view, to move the dial.

“The company has benefited from offering interest-free credit in the last year and a more positive upturn in housing transactions and consumer confidence.

“It is, we believe, starting to feel some impact from the recent launch of Martin Harris’ new retail concept, Tapi, which already has over 20 stores opened in the last six months.” – Freddie George, Cantor Fitzgerald

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“Carpetright’s interim results deliver 34% increase in underlying pre-tax profit, in keeping with expectations.

“Robust first-half trading has carried over into peak, leaving full-year profit expectations unchanged. However, significant progress on closing overlapping space will generate material cost savings. We upgrade our full-year 2017 and 2018 pre-tax profit forecasts by circa 16% and circa 22%.

“Offering three-year compound EPS growth of 25%, Carpetright looks set to become one of the stronger retail recovery plays.” – John Stevenson, Peel Hunt

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