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Carpetright still struggling

RESULTS: Property-related costs in the UK and difficult trading in Europe have hit profits and sales at Carpetright
June 26, 2013

The impact of a bloated store estate significantly explained the full-year reported loss at carpet retailer, Carpetright (CPR). Indeed, adjust for £14.8m of costs related to onerous leases and freehold property impairments, and underlying pre-tax profit actually grew 143 per cent to £9.7m.

IC TIP: Sell at 606p

In the UK, self-help initiatives - such as store refits - helped grow second-half sales and like-for-like UK revenue rose by a decent 2.2 per cent in the period. Moreover, UK underlying operating profit improved to £10.9m from last year's £2.8m - thanks to better sourcing and promotional planning as well as improved margins at the floor coverings segment. A net 12 UK stores were closed and 154 refurbished, with modernised stores returning a 10 per cent sales uplift. Low-margin wholesale business, however, fell 54.4 per cent - which offset a rise in lower-margin bed sales. Trading in Europe, largely Belgium and Holland, remained tough as austerity measures discouraged consumers from spending. Accordingly, sales there tumbled 15.5 per cent (or 11 per cent on a like-for-like basis), while underlying operating profit tumbled 90.5 per cent to £0.5m.

Broker N +1 Singer expects adjusted pre-tax profit of £14.5m for 2014, giving EPS of 16.7p (from 10.2p in 2013).

CARPETRIGHT (CPR)
ORD PRICE:606pMARKET VALUE:£410m
TOUCH:604-615p12-MONTH HIGH:716pLOW: 580p
DIVIDEND YIELD:nilPE RATIO:na
NET ASSET VALUE:97p*NET DEBT:16%

Year to 27 AprTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
200948316.717.68.0
201051722.323.516.0
20114876.606.808.0
201247213.516.4nil
2013458-5.10-9.80nil
% change-3---

*Includes intangible assets of £60.8m, or 90p a share