31 Jan 2012 07:00
Embargoed until 7am, 31 January 2012
31 January 2012
Carpetright plc
Interim Management Statement
Carpetright plc, Europe's leading specialist carpet and floor coverings retailer, today announces its trading update for the 12 weeks ended 21 January 2012.
Highlights
·; Group sales1 declined by 3.8%.
·; Sales in the UK declined by 4.8%, with like-for-like sales2 down 0.5%.
·; In local currency terms, total sales in Rest of Europe (The Netherlands, Belgium and the Republic of Ireland) decreased by 0.1% with like-for-like sales up 0.3%. After allowing for the movement in exchange rates, this translates to a total sales increase in Rest of Europe of 1.1%.
·; Whilst self-help initiatives are improving the Group's performance, based on the current pace of sales and margin improvement, full year underlying pre-tax profit is expected to be slightly below the lower end of current market expectations.
·; Year end net debt expected to be around £43m (2011: £65.7m).
| 12 weeks to 21 January 2012
| 38 weeks to 21 January 2012
|
Group Sales | (3.8%) | (4.1%) |
UK | ||
- Total | (4.8%) | (5.3%) |
- Like-for-like | (0.5%) | (1.7%) |
Rest of Europe | ||
- Total (in GBP) | 1.1% | 1.7% |
- Total (in local currency) | (0.1%) | (1.8%) |
- Like-for-like (in local currency) | 0.3% | (1.3%) |
Lord Harris of Peckham, Chairman and Chief Executive, said:
"Tough trading conditions in the UK persisted in the third quarter of our financial year with fragile consumer confidence producing a difficult floor coverings market. We have said in the past that the like-for-like sales performance has been volatile, and this continues to be the case, with volumes remaining sensitive to levels of promotional discounting. Excluding sales from our insurance replacement business, which has been disappointing, our core retail business would have reported like-for-like growth of 1.0%.
"Against this tough backdrop we have continued to focus on a range of self-help initiatives and have made progress in each of these areas. The response to the re-launch of our bed proposition in January was encouraging and we have completed the refurbishment of 27 stores, which are delivering good growth. The gross profit margin decline seen the in first half was 430 basis points. This is expected to moderate to around 300 basis points in the second half, slightly down on our previous expectation, reflecting the continued need to drive value for the consumer to maintain sales momentum. We have continued to take a determined approach to reducing the cost base and expect this to be down by approximately £5m year on year, in line with our previous expectations.
"We are delighted that the actions taken in our Rest of Europe operations are now delivering growth in like-for-like sales and an improvement in profitability. We are particularly pleased with the success of the recovery plan in the Republic of Ireland.
"In this current environment, predicting the final outcome for the year with any accuracy is difficult. The result for the year will depend on our performance in the final quarter when we see some weak comparatives but, with sales volatility continuing to impact on the pace of margin improvement, we expect underlying pre-tax profits for the full year will be slightly below the lower end of the current range of market expectations. We expect the year end net debt to be significantly down on the previous year, at around £43m.
"Looking forward, I see no respite from the challenging environment over the next 12 months but remain confident the Group will emerge in a strong position to deliver future growth once consumer demand improves."
The Group will report its usual year end pre-close trading update on Tuesday 24 April 2012 in advance of its year end on 28 April 2012.
Analyst conference call
Lord Harris will host a conference call for analysts at 8.00am GMT today.
The dial in number is +44 (0)20 3003 2666 with the passcode 374 6482
Thereafter, for further enquiries please contact:
Carpetright plc
Lord Harris of Peckham, Chairman and Chief Executive
Neil Page, Group Finance Director
Tel: 01708 802000
Citigate Dewe Rogerson
Kevin Smith / Lindsay Noton
Tel: 020 7638 9571
A copy of this trading statement will be available on our website www.carpetright.plc.uk today from 7.00am.
Notes
1. All sales figures are quoted after deducting VAT.
2. Like-for-like sales calculated as this year's net sales divided by last year's net sales for all stores that are at least 12 months old at the beginning of our financial year. Stores closed during the year are excluded from both years. No account is taken of changes to store size or introduction of third party concessions. Sales from insurance and house building contracts are supplied through the stores and included in their figures.
3. There have been no significant changes to the Group's financial position during the period.
4. Certain statements in this report are forward looking. Although the Group believes that the expectations reflected in these forward looking statements are reasonable, we can give no assurance that these expectations will prove to have been correct. Because these statements contain risks and uncertainties, actual results may differ materially from those expressed or implied by these forward looking statements. We undertake no obligation to update any forward looking statements whether as a result of new information, future events or otherwise.
Appendix 1: Store portfolio
Store portfolio | 21 Jan 2012
| 29 Oct 2011 | 30 April 2011 | |||
Sites | Sq Ft '000 | Sites | Sq Ft '000 | Sites | Sq Ft '000 | |
UK | ||||||
Standalone | 479 | 4,273 | 480 | 4,275 | 497 | 4,416 |
Concessions | 22 | 44 | 23 | 46 | 42 | 98 |
Total | 501 | 4,317 | 503 | 4,321 | 539 | 4,514 |
Rest of Europe | ||||||
Republic of Ireland | 20 | 147 | 20 | 147 | 20 | 145 |
The Netherlands | 93 | 1,088 | 92 | 1,078 | 92 | 1,078 |
Belgium | 28 | 329 | 28 | 329 | 28 | 335 |
Total | 141 | 1,564 | 140 | 1,554 | 140 | 1,558 |
Total Group | 642 | 5,881 | 643 | 5,875 | 679 | 6,072 |