Emphasis on value paying off for United

FLOORING specialist United Carpets has seen a fall in underlying half year sales, but described it as a solid performance in a very challenging trading environment.

United's chief executive Paul Eyre said customers remain cautious over spending following uncertainty in the job market and the lack of any clear signs of economic recovery.

The Mexborough-based company said pre-tax profits fell 14 per cent to 600,000 in the six months to September 30.

"United Carpets' focus on offering exceptional value combined with the benefits of our franchise model has ensured we have maintained our market position and continued to attract new franchisees," said Mr Eyre.

"We continue to expand the business and have the financial flexibility to take advantage of any opportunities that come about as a result of the current slowdown and remain well placed to benefit as and when growth returns to the economy."

The group said that while the market has remained tough in the 10 weeks since the end of September, overall like-for-like sales have improved a little to 4.6 per cent down on last year.

Improvements in the beds division more than offset the adverse impact from the heavy snowfalls.

Chairman Peter Cowgill said: "Whilst there is little evidence of any significant improvement in the market in the short term, United Carpets is well-positioned to work through this period."

He added that smaller, independent operators are likely to come under increasing pressure which may lead to opportunities to recruit experienced potential franchisees looking for the support of a larger network.

"With a strong brand, a healthy balance sheet and a clear strategy for developing the business, we are confident of continuing to meet our objective of generating shareholder value," said Mr Cowgill.

Revenues were five per cent lower for the period, reflecting the franchising of a significant number of corporate stores.

This replaced gross sales with franchised income, which is lower but does not have the same associated running costs.

Total store numbers increased slightly from 82 to 83 over the six-month period and have increased further since the period end to 86.

Despite the market conditions, network sales across the group was broadly maintained at 34.2m, down from 34.5m last time.

Like-for-like sales across the whole of the network were 5.3 per cent lower.

The core flooring business was 3.1 per cent lower on a like-for-like basis whilst bed like-for-like sales were down by 24.2 per cent.

The group said its balance sheet continues to be robust with no borrowings, other than a small number of minor hire purchase contracts.

United's board is maintaining the group's interim dividend at 0.25p per share.

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

The group ended the period under review with 83 branded stores across Northern and Central England.

With the exception of 10 corporate stores, these were all franchises operating under United Carpets' bespoke franchise model.

United said that during a more challenging environment, with weakened consumer confidence and continued uncertainty over jobs, its franchised stores are more incentivised to perform.