Headline profits collapsed at Carpetright (CPR) in the year to April 2017, but as the decline was pretty well flagged, the shares rose over 8 per cent on some improved underlying revenues.
Like-for-like sales grew by 1.8 per cent in the second half, although this was not enough to offset a first-half decline, and overall comparable sales were down 0.5 per cent. However, the refurbishment programme looks to be working well, with the stores operating under a new brand identity delivering a 6.8 per cent rise in like-for-like sales. Refurbishment of the remaining half-of-the UK stores is expected to be completed by the end of 2018. And despite the widespread dip in consumer sales in May, Carpetright's domestic sales were up 2 per cent in the seven weeks to 17 June 2017, on the same comparable basis.
Underlying operating profits were down from £17.8m to £10.7m. Increased competition makes it harder for the company to pass on the higher import costs caused by sterling weakness. To firm up margins, underperforming stores have been picked out and nine closures were made during the year, taking the number of outlets down to 426. However, exiting leases and weaker profits pushed net debt up from £1.1m to £9.8m.
Analysts at Peel Hunt are forecasting adjusted pre-tax profits for the year to April 2018 of £16.7m and EPS of 18.4p (from £14.4m and 16p in FY2017).
CARPETRIGHT (CPR) | ||||
---|---|---|---|---|
ORD PRICE: | 194.5p | MARKET VALUE: | £132m | |
TOUCH: | 190-198.75p | 12-MONTH HIGH: | 293p | LOW: 149p |
DIVIDEND YIELD: | NIL | PE RATIO: | 195 | |
NET ASSET VALUE: | 115p* | NET DEBT: | 13% |
Year to 29 Apr | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2013 | 458 | -5.1 | -9.8 | nil |
2014 | 448 | -7.2 | -5.3 | nil |
2015** | 470 | 6.6 | 6.7 | nil |
2016 | 457 | 12.8 | 14.9 | nil |
2017 | 458 | 0.9 | 1.0 | nil |
% change | +0 | -93 | -93 | - |
Ex-div: na Payment: na *Including intangible assets of £57m, or 84p a share **53-week period |