Shares in Carpetright fell more than 9 per cent despite a rise in profits and a doubling of the dividend payout from the UK's largest flooring retailer. The poor performance in the share price came as investors chose not to celebrate last year's improved performance but instead dwelt on the gloomy outlook for the housing market in the year ahead.
This matters because fewer new houses and a lower level of transactions in pre-built properties will inevitably hit Carpetright's sales, while plunging consumer confidence, stoked by unemployment fears and rising taxation, won't help either. What's more, the group's better performance was against a very weak trading performance a year earlier, so while pre-tax profits rose by more than one-third from 2009, they are still down 63 per cent from 2008.
Still, Carpetright has made the best of a tough trading environment, with sales boosted by the closure of major competitor, Allied Carpets. Underlying profits in the UK rose 67.9 per cent to £26.2m, driven higher by carpet sales, which more than offset a decline in laminate/wood floor coverings. Profits were also up at the group's Netherlands and Belgian outlets, rising 10.3 per cent to £9.6m. However, an increase in the underlying loss from the group's Polish operation to £1.7m led to the closure of trading here, resulting in one-off costs of £3.5m.
Carpetright has also kept a tight rein on costs, which helped to boost free cash flow from a £12.1m outflow a year earlier to a positive £32m, which helped to trim net debt from £97.1m to £71.3m.
Broker KBC Peel Hunt revised its 2011 pre-tax forecast down to £31.7m, giving EPS of 33.3p (from £29.9m and 31.4p last year).
| CARPETRIGHT (CPR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 640p | MARKET VALUE: | £430m | |
| TOUCH: | 640-642p | 12-MONTH HIGH: | 999p | LOW:547p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 27 | |
| NET ASSET VALUE: | 106p* | NET DEBT: | 100% | |
| Year to 1 May | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 451 | 64.2 | 65.0 | 49.0 |
| 2007 | 476 | 67.0 | 68.2 | 50.0 |
| 2008 | 522 | 59.5 | 63.2 | 52.0 |
| 2009 | 483 | 16.7 | 17.6 | 8.00 |
| 2010 | 517 | 22.3 | 23.5 | 16.0 |
| % change | +7 | +34 | +34 | +100 |
Ex-div:08 Sep Payment:24 Sep *Includes intangible assets of £67.2m or 100p a share | ||||
