LONDON (Alliance News) - Carpetright PLC on Tuesday reported a widened loss in the first half of its current financial year, as revenue dropped on massive store closures in the UK.
The retailer of floor coverings said its loss widened sharply in the 26 weeks ended October 27 to GBP11.7 million from GBP600,000 reported for the same period a year prior, as revenue fell 16% to GBP191.1 million from GBP226.6 million.
Carpetright said it secured the necessary creditor approvals and financing and started the restructuring process as soon as the second quarter of its current financial year.
The company highlighted that these measures "inevitably" impacted on its financial performance in the period; however, it expects to realise GBP19 million of annualised savings upon completion of the restructuring, being conducted as part of its company voluntary arrangement.
In the first half, Carpetright said it shut 54 stores out of 81 it had designated as underperforming or on unfavourable lease terms in its CVA, with further two stores expected to close in the second half. It said the remaining 25 are paying no rent, just business rates, as the landlords didn't want an empty unit in their retail park.
In total, 65 UK stores were closed during the period, leaving Carpetright with 345 stores in total. It noted that more than 52% of its UK stores now have an option to break their lease within two years.
The store closure programme has been extensive along with a number of redundancies in both stores and the company's head office, it said.
Meanwhile, Carpetright said its European business delivered like-for-like sales growth of 0.5% in the first half driven by the expanded Netherlands division.
Looking forward, Carpetright highlighted that the uncertainty relating to the UK's exit from the EU remain concerns for any retail business.
However, the company said it believes that it is structurally best placed in the floorcoverings sector to deal with the Brexit challenges and is able to return the business to sustainable long-term profitability.
"This is a transitional year for Carpetright as we work through our restructuring plan," said Chief Executive Wilf Walsh.
"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," added Walsh.
The stock was trading 8.4% higher on Tuesday at 17.72 pence each.
