Moving from an underlying pre-tax profit of £14.4m to a loss of £8.7m in just one year would weigh on any company’s share price. But seeing that retail chain Carpetright (CPR) can’t deliver much more bad news to investors, a modest share price fall on results shouldn't surprise us. Most of that negative sentiment is already reflected in a market valuation that has contracted by more than three-quarters over the last 12 months.
To stem the tide, the group recently entered a 'company voluntary agreement' (CVA) to renegotiate – and even exit – some of its onerous property leases. This should curb costs and free up cash for future reinvestment, pay down debt, and provide working capital flexibility.
Around 81 UK Carpetright stores will close by the end of September, with all remaining stores set to receive additional investment by the end of the CVA period in 2021. A recent £65m equity placing will help fund these refurbishments, as well as upgrade the group’s digital platform. Even so, analysts at Peel Hunt expect losses to widen to £13.7m for the year ending April 2019, giving a loss per share of 3.9p, compared with -£8.7m and -6.6p in FY2018.
| CARPETRIGHT (CPR) | ||||
| ORD PRICE: | 30p | MARKET VALUE: | £90m | |
| TOUCH: | 29.3-30.8p | 12-MONTH HIGH: | 181p | LOW: 28p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 6.3p* | NET DEBT: | 274% | |
| Year to 28 Apr | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 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 |
| 2018 | 444 | -70.5 | -94.6 | nil |
| % change | -3 | - | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £27m, or 8.9p a share | ||||
