AGM Statement

31 Oct 2005 10:15

United Carpets Group plc31 October 2005 31 October 2005 United Carpets Group plc ('United Carpets' or 'the Group') AGM Statement The following statement on current trading was made at the Annual GeneralMeeting of United Carpets held today at 10.00am. 'The fact that 2005 has been a challenging environment for retailers has beenwidely reported on. Like many in our sector, we have been affected by theslowdown in consumer spending and have therefore had to adopt a more defensivestrategy than we envisaged earlier this year. While overall like for like salesfor the 30 weeks to 27 October 2005 are slightly positive, reflecting theunderlying strength of the Group, profits before tax for the six months ended 30September 2005 will be significantly below the comparative period last year. Instead of pursuing our rollout programme of new franchisee stores at the rateset at the beginning of 2005, irrespective of market conditions, we switched ourfocus to addressing those stores which were significantly under performing byintroducing new franchisees to run them. This has meant that we finished thefirst 6 months of this financial year with 58 stores, three less than ourinitial target. As a result, the first half did not benefit from the anticipatedlevel of franchise fee income, however, we believe these actions will havestrengthened our portfolio for the longer term growth of the Group. We have also managed six stores centrally in addition to our five principalcorporate stores. These non-core corporate stores struggled under the prevailingmarket conditions and have had a disproportionately adverse affect on ouroverall profitability. Of the six stores, one has already been re-franchised, asecond is in advanced negotiations and two are planned to be closed during thenext six months. Suitable franchisees are being sought for the remaining twostores. We have maintained investment in marketing throughout the year resulting in aseries of successful television, radio and print advertising campaigns. Thesuccess of these campaigns is reflected in the modest increase in like for likesales and growth in brand awareness despite a very tough retail environment. The effect of the general downturn in consumer spending has been more noticeableon beds due to the higher individual sales value compared to flooring.Consequently, revenues from beds were down 10.1% on a like for like basis forthe 30 weeks to 27 October 2005. Looking ahead, the Group's longer term prospects remain strong underpinned by arobust balance sheet with bank balances of £2.8m. There is a good pipeline ofinteresting new sites which together with the talented pool of new franchiseeswe have in place bodes well for the future. Our most recent trading dataindicates improvement in some areas such as beds and the Board remains whollyconfident in the strength of the Group's retail proposition and franchise model. We will report our interim results for 6 months ended 30 September 2005 inDecember.' Enquiries: United Carpets 01709 579450Paul Eyre, Chief ExecutiveIan Bowness, Finance Director Cardew Group 020 7930 0777Tim Robertson This information is provided by RNS The company news service from the London Stock Exchange