Like many retailers, the downturn has brought both good and bad news for Carpetright. On the one hand the severe difficulties across the housing market saw demand for floor coverings collapse - in fact, a year ago, it reported a like-for-like sales slump of over 13 per cent. But on the other, the group has, like many retailers, benefited from problems at weaker rivals.
Carpetright admitted that the collapse and subsequent small-scale re-launch of competitor Allied Carpets in July was partly behind its strongest UK performance since 2004, which saw underlying pre-tax profits climb 58 per cent to £13.9m. It also pointed out that steadily rising mortgage approvals from the trough in November last year had also contributed to the 3.9 per cent increase in like-for-like UK and Ireland sales, which account for 83 per cent of its business. It said the direction of UK sales is closely correlated to mortgage approvals, which are now up nearly 15 per cent on a year ago.
And while Carpetright was certainly helped along by external factors, it should be given credit for taking the right actions to capitalise on the opportunities they presented. The group increased advertising by 24 per cent to promote its strong price credentials and added net new space of 151,000 square feet, an increase of 3.3 per cent since the start of the year - that helped total UK sales climb 9.6 per cent to £213m. However sales in its Benelux business fell 3.9 per cent in local currency terms as a result of economic weakness there, and it also announced the withdrawal from its loss-making Polish operation, which will mean incurring a one-off cost of £2.5m.
Broker KBC Peel Hunt expects adjusted full-year pre-tax profits of £37.5m and EPS of 39.4p (from £17.2m and 18.2p in 2009).
CARPETRIGHT (CPR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 911p | MARKET VALUE: | £ 612m | |
| TOUCH: | 909-917p | 12-MONTH HIGH: | 970p | LOW: 311p |
| DIVIDEND YIELD: | 1.3% | PE RATIO: | 48 | |
| NET ASSET VALUE: | 103p* | NET CASH: | 106% | |
| Half-year to 31 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 237 | 9.50 | 10.1 | 4.00 |
| 2009 | 258 | 11.0 | 11.6 | 8.00 |
| % change | +9 | +16 | +15 | +100 |
Ex-div:03 Feb Payment:19 Feb *Includes intangible assets of £69.1m or 103p a share | ||||
