UNITED Carpets Group plc said a controversial pre-pack administration for its main trading arm, which left landlords out of pocket, has put the bed and carpet retailer on a more stable footing.
In October, the stock market-listed chain put United Carpets (Northern) Ltd into administration to escape onerous leases. The plc then immediately bought its 72 stores, two warehouses in Doncaster and Derbyshire and most of its assets back from administrators Begbies Traynor.
Bramley-based United now operates from 66 stores, of which 15 are owned and 51 are franchised.
“The board believes that as a result of the actions taken since June 2012, the group is in a better position to tackle what remains a very challenging marketplace,” said chairman Peter Cowgill.
“Following the publication of these results, the board expects that the suspension of the company’s shares will be lifted allowing them to again be traded on AIM.”
United said without rent reductions, a number of its stores would have been unable to continue trading. It had been propping up franchised stores, which it realised was “unsustainable”.
United said the pre-pack secured “more favourable terms” with landlords. Negotiations are ongoing, but are “expected to enable the majority of franchises to trade successfully”.
Terms have been agreed with two-thirds of stores, including lower rents, shorter lease periods, break clauses and axing of repair obligations.
At the time of the pre-pack United argued most suppliers would not lose out.
Chief executive Paul Eyre said: “While the board was very disappointed at the need to appoint administrators to UCN, the re-evaluation of the group’s business model was a necessary step in building a long-term future for United Carpets.
“The group is refocusing and re-establishing itself and once negotiations over the remaining stores have been completed, the operating base of stores will have reduced by around one third since the start of the period. Progress continues to be made in re-aligning central costs with this reduced operating base.”
The company posted pre-tax losses of £2.6m for the 18-month period to October 2012, weighed down by £3m of exceptional items. Like-for-like sales were down one per cent, with flooring up 0.2 per cent and bed sales down 13.7 per cent.
Mr Eyre said trading since then has continued to be “very challenging”, with competition, snow, negative perceptions from the pre-pack and lower marketing driving underlying sales down 11.1 per cent in the period.
“Whilst this performance is disappointing, the removal of the majority of the loss-making stores means that the group and its remaining franchisees are better able to survive this downturn in trade,” he said.