Carpetright

Tuesday, 26th June 2018 10:58 - by Rajan Dhall

This morning we see earnings from troubled retailer Carpetright (CPR - pretty appropriate ticker). It's actually hard to believe the demise of the Co.'s share price, since the highs in 2015 of 553p we now trade at 30! yes 94.51% lower. In that time the Co. has had major problems, increased margins, the falling pound and management issues. 

This morning the company has released their FY results and following the CVA (company voluntary arrangement) it seems the costs of restructuring are still hitting the company's bottom line:

·Group revenue decreased by 3.0% to £443.8m (2017: £457.6m).

·Underlying EBITDA of £6.4m (2017: £28.6m).

·Underlying loss before tax of £8.7m (2017: profit of £14.4m), in-line with previous guidance.

·Net debt position of £53.0m (2017: £9.8m) reflecting the decline in operating performance and tightening of credit terms by suppliers responding to adverse publicity surrounding the Group's restructuring.

·Separately reported items of £61.8m (2017: £13.5m), driven mainly by the costs and accounting impact of the restructuring activity, of which £49.0m is non-cash, leading to a statutory loss before tax of £70.5m (2017: profit of £0.9m).

Wilf Walsh, Chief Executive, also stated "After a difficult trading year impacted by reduced consumer spend, increased competition and the legacy of an unsustainable, over rented store portfolio - the CVA and recapitalisation offers us the chance to rebuild Carpetright which remains the clear market leader in floor coverings with outstanding consumer brand awareness.  This will be a transitional year for the Group as we work through our recovery plan."

Looking over the chart now you can see it has been a tough period for the group and I don't envy the task of the CEO. Even at this low price support in the form of volume is still low. The lowest traded price was around the 28p level and you can see the market rejected those low levels to push back up to 30p, over the last 2 sessions price action is been supportive also but I think today we could open lower but ultimately we need to give the recovery plan more time.

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.