It's hard work at moment, admits United

The Rotherham-based group said that in the 17 weeks since the beginning of April, like-for-like sales in the flooring division, which sells everything from wool carpets to vinyl flooring, fell 2.6 per cent.

The downturn was felt even more keenly in the beds division, where like-for-like sales fell by 25.5 per cent during the 17 weeks.

The group, which is the second largest chain of specialist retail carpet and floor covering stores in the UK after Carpetright, is cautious about future trading.

Chief executive Paul Eyre said: "The market environment remains challenging, with little improvement in volume across the housing market and an understandable sense of caution amongst consumers given the continuing economic uncertainty in the UK.

"This was reflected in a slow trading period since January which has continued into the current financial year."

Finance director Ian Bowness said the beds division, which accounts for just under 10 per cent of network sales, has suffered from beds being a more expensive purchase, with an average sale price of 300 compared to the average flooring sale of 180.

The majority of group revenues come from the sale of floor coverings, predominantly carpet, laminate and vinyl flooring through the franchised stores and the group's own corporate stores.

"It's hard work at the moment," said Mr Bowness. "We expected 2009 to be tough, but we were pleasantly surprised. It was a reasonable year. This year is noticeably harder."

Since then the group has had a constant stream of gloomy news.

"It's not the sort of thing that makes people want to go out and spend money," said Mr Bowness.

On a brighter note he said the increase in VAT next January could boost sales in the traditionally stronger second half of this year, as people get their orders in before the VAT hike.

Another advantage the group has over rivals is that franchisees are highly motivated as the store is normally their sole source of income. The group has traditionally operated at the value end of the market.

"We offer good quality at exceptional value," said Mr Bowness.

United said its low-cost floor coverings appeal to a wide range of fashion-conscious customers.

The company does not see any significant improvement in the economy for the next 12 to 18 months.

In the year to March 31 network sales grew by 7.4 per cent to 69.9m and like-for-like sales rose by one per cent. Revenues increased 2.5 per cent to 27.47m. Pre-tax profits for the year rose by 85 per cent to 1.098m.

Store numbers rose by two to 82 and the number of stores owned by the company fell from 23 to 12 as part of the group's drive towards franchised stores.

Mr Bowness said the group envisages keeping just three company-owned stores.

"In an ideal world we'd want three core stores that we'd still operate – the bigger, harder to manage stores where we can train franchisees," he said.

The group hopes to convert nine of the 12 company owned stores to franchises. However, it will continue to buy stores that it will switch to franchise once the right candidate is found.

The board is recommending a final dividend of 0.5p per share, which together with the interim dividend of 0.25p per share paid in January makes a total ordinary dividend of 0.75p per share for the year.

Building on its reputation

United Carpets has established itself as the UK's largest franchised carpet retailer.

A family owned and run business until its flotation on the London Stock Exchange in 2005, United Carpets has built its reputation on "value for money flooring".

It has 82 stores across the UK and said its status as a publicly quoted company has allowed it to expand and strengthen its service and support areas.

New product ranges cover every aspect of flooring, from carpets and rugs, to laminates, real wood floors and vinyls. The United beds division is expanding rapidly.

The group's franchise proposal has been developed over more than 10 years and has evolved into one of the UK's most profitable franchise offers.