United Carpets mulls more store closures

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UNITED Carpets warned it may cull more poorly-performing stores as it is hit hard by the squeeze on consumer spending.

The Bramley, Rotherham-based floor coverings retailer, said it has been forced to “terminate” a number of franchises in recent weeks and is reviewing other stores to assess their viability.

Profits are likely to be hit by the closures, it said, adding it is proving “increasingly challenging” to turn around failing stores.

“The difficult market environment, uncertainty surrounding the economic recovery and the outlook for Europe... has continued,” said the group.

“As a consequence, apart from occasional, short-lived, promotion-led activity, trading for retailers generally and for ‘big ticket’ retailers in particular has been extremely challenging.”

United said this has meant a “significant proportion” of its franchise network is struggling, “with particular issues in meeting their liabilities to creditors and the group”.

The company said the problems come despite its considerable investment in technology, changes to management and substantial financial support.

The carpets, rugs and beds retailer did not say how many stores have closed since the end of March. It has 85 stores, according to its website, with the majority of these franchises.

Its review will ascertain whether a number of stores are viable under its current franchise model. The group plans to impose more stringent criteria on stores to “prevent an accumulation of poorly performing stores creating an unsustainable financial burden on the group”.

United believes the review’s impact could be significant, but said the continuing core sites should be able to operate successfully. It will announce the outcome in late August.