Carpetright treads gently as firm’s tentative recovery continues

The group, which has 484 outlets in the UK, said self-help actions such as its drive to sell more beds, the extension of laminate ranges to more stores and the impact of shop refits were helping to offset volatile trading conditions.

Its like-for-like sales figure increased 0.6 per cent in the 12 weeks to October 13, following on from a rise of 1.7 per cent in the previous quarter.

While the figures were against comparisons with poor trading a year earlier, Carpetright said it was performing in line with expectations.

The UK improvement, which increases to 2.4 per cent when excluding business achieved through insurers and housebuilders, has been offset by a sharp drop in sales in the Netherlands, Belgium and Ireland.

Carpetright blamed weakening consumer confidence for the 12.2 per cent drop in rest of Europe same-store sales in the period.

Freddie George, retail analyst at Seymour Pierce stockbrokers, said UK sales were now going in the right direction with three quarters of positive like-for-like sales growth following two years of declines.

He added: “Earnings should start to recover but not in our view back to the record operating profit levels of over £60m seen in 2004.

“It will, we believe, be a long time before housing activity, the main driver of results, gets back to the highs of the last decade.” The group, whose profits have slumped to £4m from £62m in 2008, is now under the management of new chief executive Darren Shapland.

“Whilst the underlying floor coverings market remains volatile, our self-help actions such as the development of our bed proposition, extension of our laminate range to more stores and the impact of our store refurbishment programme, continue to deliver positive results,” said Mr Shapland.

“Gross margin for the period continued to improve in line with our previously announced expectations and our guidance of a full year gross margin improvement in the range of 200-250 basis points above the prior year, remains unchanged.

“The majority of this margin improvement will be realised in the first half, as we annualise the margin improvement measures implemented in the second half of last year.”

The group, which makes around 80 per cent of sales in the UK from its stores, said its expectations for the full year remained unchanged.

Carpetright is expected to deliver a pre-tax profit for the full year of £10.54m, according to a poll of analysts.