Carpetright has swung to a loss as the retailer battled with rapidly declining sales and pushed through store closures in a bid to stay afloat.
The retailer made an underlying loss before tax of £8.7m for the year to 28 April, having made profit of £14.4m the year before.
Carpetright’s statutory loss before tax was £70.5m, compared to a profit of £900,000 in the prior year, which the firm said was driven by the cost of its store closure programme. Group revenue fell by 3 per cent year-on-year, down from £457.6m to £443.8m.
In the UK, like-for-like sales were down by 3.6 per cent, with the sales decline accelerating from 0.7 per cent in the first half of the year to 7.8 per cent in the second half.
Carpetright’s results come after the company pushed through a Company Voluntary Agreement (CVA), a restructuring procedure allowing it to shut 81 stores. The store closure programme, which is due to be completed by the end of September, will lead to the loss of hundreds of jobs.
Carpetright said trading was “heavily impacted” while it was putting together its CVA as some suppliers withdrew their supplies, leading to stock shortages. Net debt jumped to £53m, up from £9.8m, which Carpetright said was due to suppliers tightening their credit terms in response to the distress in the business.
Wilf Walsh, chief executive, said: “After a difficult trading year impacted by reduced consumer spend, increased competition and the legacy of an unsustainable, over-rented store portfolio - the CVA and recapitalisation offers us the chance to rebuild Carpetright which remains the clear market leader in floor coverings with outstanding consumer brand awareness.”
Phil Carroll, analyst at Shore Captial, issued a hold notice on the firm and said: “Current trading is still said to be challenging and not helped by the exceptionally warm weather and stock shortages a suppliers had withdrawn stock.”