CPR.L Regulatory News (CPR)

28 Oct 2008 07:00



Carpetright plc

Pre-close Trading Update

Carpetright plc, Europe's leading specialist carpet and floor coverings retailer, today publishes its First Half Trading Update for the first 25 weeks of its financial year, representing the trading period from 4 May to 25 October 2008.

Group sales decreased by 5.9%, with the store base at 689 stores at the period end.

The UK and Republic of Ireland business recorded a sales decrease of 11.2%, with like-for-like sales down by 12.5%. Despite this, there has been an improvement in the gross margin as anticipated. Within the UK and Republic of Ireland, 13 stores opened during the period and 11 have been closed, increasing the total number of outlets to 561, including 60 concessions and 39 Storeys stores.

Our business in the Rest of Europe (The Netherlands, Belgium and Poland), continues to make good progress. Sales in local currency have increased by 12.0%, with like-for-like sales up 2.3%. As previously stated, we completed the €7.8 million acquisition of the trade and assets of Ben de Graaff Tapijt, a floor coverings retailer in the south of The Netherlands, on 30 June 2008. Along with one new store opening in The Netherlands, this brings the store base in the Rest of Europe to 128 stores.

Trading in the UK and Republic of Ireland continues to be challenging, as the deterioration in the housing market and the turmoil in the financial markets has severely impacted consumer confidence. In our September announcement, we said October and November were important trading months. Trading in October has been above the year to date trend but continues to be weak. Consequently, management have become more cautious about expectations for the full financial year.

Against these difficult conditions, we continue to examine opportunities to increase our profitability by looking at complementary markets. We are now at an advanced stage of negotiation to acquire the assets and business of Sleepright UK Ltd, who currently retail beds in 94 Carpetright stores on a rental concession basis. We expect to complete the transaction by early December for a modest initial cash consideration, funded from internal resources. The Sleepright format has been trialled successfully over the past 18 months, delivering incremental sales within the same floor space. We are now taking the opportunity to utilize the scale and infrastructure of the Group to enhance Sleepright's profitability.

There have been no significant changes to the financial position of the Group since the publication of the Preliminary Results on 1 July 2008.

Lord Harris of Peckham, Chairman and Chief Executive, said:

"The trading environment in the UK continues to be extremely difficult. We see this continuing for at least another 18 months. The Sleepright acquisition, whilst small in size, provides a good opportunity to enhance the use of our existing floor space and improve UK profitability.

Trading in Europe has improved since Q1, and remained relatively resilient to the recent turmoil in the financial markets although we are taking a conservative view of prospects for our European business for the balance of the year.  

As I have said before, these current market conditions are the most difficult I have seen and we are now taking a more cautious view of prospects for the full financial year.''

The Group will report its Interim Results for the six months to 1 November 2008 on 16 December 2008.

Analyst conference call

Lord Harris and Neil Page will host a conference call for analysts at 08.15am this morning. 

The dial in number is +44 (0) 203 003 2666, with a password "Carpetright". 

Thereafter, for further enquiries please contact:

28 October 2008

Carpetright plc

Pre-close Trading Update

* excludes joint venture in Germany