Carpetright and Victoria have different tales to tell in the sector

Annual profits at Carpetright slumped to £4m although the group said sales picked up in the second half.

Its profits were a quarter of last year’s £17m and down from £62m in 2008.

UK like-for-like sales fell 0.2 per cent over the year to April 28 due to a weak market and increased promotions although Carpetright said there was “cause for optimism” in recent trading.

Singer Capital Markets analyst Matthew McEachran said: “Overall, these results were slightly better than expected, driven by a slightly better final week of UK trade.”

Mr McEachran is forecasting market share gains and a doubling in profits this year on the back of sharper pricing, website improvements and staff training.

The 0.2 per cent fall in UK underlying sales was better than the six per cent decline in the previous year, helped by a 1.9 per cent rise in the second half.

Carpetright closed 49 stores more than it opened in the UK but said it is committed to maintaining its store estate in order to act as a showroom for its internet business.

A drive to sell more beds has also proved successful and it said the business has grown sales to £23m in just three years, with “significant scope” for future expan- sion.

Victoria, which has its own yarn spinning mill in Holmfirth, is the largest supplier to leading department store chain John Lewis.

Victoria’s managing director Alan Bullock said: “We saw strong growth in sales to the John Lewis Partnership, where a completely new programme of carpet ranges was introduced last April.”

John Lewis, which has been a customer of Victoria for 30 years, has proved remarkably resilient during the economic downturn.

Victoria makes 70 per cent of its sales from the independent retail sector and it has a fast-growing business supplying the insurance replacement market.

It doesn’t supply Carpetright, which is positioned at the low to mid end of the market.

Mr Bullock said Victoria’s export sales were significantly up on the previous year and it has won a number of contracts in the hospitality sector including the Hotel Bristol in Paris.

Analysts at Seymour Pierce said Victoria’s results were robust despite the difficult economic backdrop.

Underlying pre-tax profits rose 15 per cent to £2.2m for the year to March 31.

“Results benefited from the closure of the loss-making Irish business and further growth in sales to John Lewis and the insurance replacement market,” said Seymour Pierce analyst Kate Calvert.