The current financial year is shaping up to be a game of two halves for floorings specialist Carpetright (CPR), although chief executive Wilf Walsh doesn't exactly know why. He calls it "a demonstration of variable consumer demand" and says the company strategy hasn't changed dramatically from one six-month period to another. But UK like-for-like sales figures threw up an interesting pattern: during the first half, underlying sales fell 2.9 per cent, while in the first six weeks of the second half, they rose 2.6 per cent. Mr Walsh attributes the uptick to the company's newly refurbished stores, which are showing signs of improved trading.
It's not all about momentum at the top line, though. The higher price of imported goods and higher competition weighed on margins, and ensured half-year pre-tax profits of £5m came in way below last year's £9m, and short of brokerage Peel Hunt's forecast of £5.7m.
That currency pressure is expected to worsen. Mr Walsh said he would do his best to keep prices competitive, but higher supplier costs and other foreign exchange headwinds would "inevitably" lead to prices increases across the sector in the 2017 calendar year.
Peel Hunt expects pre-tax profits of £16.5m for the year ending April 2017, giving EPS of 18.4p, compared with £17.3m and 19.2p in FY2016.
| CARPETRIGHT (CPR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 191p | MARKET VALUE: | £129m | |
| TOUCH: | 187-195p | 12-MONTH HIGH: | 505p | LOW: 180p |
| DIVIDEND YIELD: | Nil | PE RATIO: | 14 | |
| NET ASSET VALUE: | 125p* | NET CASH: | £0.4m | |
| Half-year to 29 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 231 | 7.1 | 7.3 | nil |
| 2016 | 222 | 4.1 | 5.8 | nil |
| % change | -4 | -42 | -20 | - |
Ex-div:na Payment:na *Includes intangible assets of £60.4, or 89p a share | ||||
