Carpetright laid low

Like-for-like sales fell 6.1 per cent in the period and the addition of an extra 8,000 sq ft of net new space wasn't enough to offset the shortfall, which management blamed on fragile consumer confidence and lower mortgage approvals. Carpetright's sales are closely correlated with the housing market measure, which has shown a steady decline in the rate of growth this year after the sharp recovery in 2009 - according to figures from the British Bankers' Association, rolling six months approvals has fallen to 33,000, and were down 25 per cent year-on-year in October.

Of course, there's little the carpet retailer can do about the state of the economy, and management continued to take steps to strengthen the business for when recovery comes. It continued the roll-out of its complementary bed offer to more stores and analysts note that this has now become a core component of its business. Indeed, the bed offering now trades from 176 outlets as at the half-year end, up from just 93 when the Sleepright concession was originally acquired in December 2008. Sales there grew 30 per cent in the period and now generate 5 per cent of turnover; a figure which should rise further with the number of outlets set to rise to 208 by Boxing Day. However, Carpetright was nevertheless able to reduce capital expenditure and good working capital management helped reduce net debt by ££12.8m to £58.5m.

Numis Securities expects full-year underlying pre-tax profit of £25.1m, giving EPS of 26.2p (2010: £29.9m/31.5p).

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