CPR.L Share News (CPR)

Normally a doubling of the dividend would be cause for celebration but the market has reacted unkindly to Carpetright's apparent generosity as it had been led to believe that the divi would be tripled.The final dividend has been doubled to 8.0p, making the full year dividend twice that of the year before at 16p, but Singer Capital Markets noted that this was 4p below the level indicated in guidance issued by Carpetright management before Christmas. Profit before tax was also slightly disappointing, coming in towards the bottom of the range of market forecasts. Underlying profit before tax in the 52 weeks to 1 May 2010 surged 64.0% to £28.2m from £172m the year before, while "as reported" pre-tax profit rose to £22.3m from £16.7m.FinnCap described the trading statement as "slightly disappointing". It had been towards the upper end of profit forecasts with a figure of £31.8m for underlying profit before tax. Total group revenue rose 7.0% to £516.6m from £482.8m the year before. The inclusion of Sleepright for its first full year contributed 2.0% of this increase.The UK & Ireland's turnover jumped 7.9%, with like for like sales up 3.1% year on year, while the stores in the Netherlands and Belgium increased revenue by 4.1%.All sales figures exclude VAT.During the year under review the group opened 53 stores and closed 45. The total store space grew by 0.8% to 6.2m square feet. Brokers seized upon the lower than expected dividend payment as a sign that management has turned more cautious on the trading outlook. "In the short term we believe the biggest risk relates to another slump in housing transactions, with approvals already pointing towards increased pressure in H1 [the first half]," Singer Capital Markets said.Lord Harris of Peckham, the chairman and chief executive of Carpetright, said: "Although we are planning for consumer demand across Europe to remain subdued, we have market leading positions in all our geographical areas with strong value led retail brands. I believe this enables us to look confidently to the future as and when the economic conditions improve."The debt situation also failed to impress. FinnCap. "We expected year-end net debt of c.£61m. The outturn is £71m," the broker said.Reading between the lines it also thinks that "the insurance and house-builder new income streams might be building slower than expected."KBC Peel Hunt reacted to the disappointing trading update by cutting its fiscal 2011 forecast profit before tax from £37.5m to £31.7m, largely because of net store closure. "With tight cost control, strong margin management and a pipeline of new revenue streams, we see no reason Carpetright cannot fully recover peak profits over time, although we have cut back our UK forecast assumptions to reflect a more restrained trading environment over the next two years," KBC analyst John Stevenson said.