Property sales boost Carpetright

Selling some of its properties helped more than double full-year profit at Carpetright as the flooring retailer continues to fight back against eroding sales.

Pre-tax profit rose to £13.5m in the year to April 28, compared to £6.6m for the previous period, after an exceptional £13.4m profit made on the sale and leaseback of nine stores in the UK and Europe.

Excluding this, pre-tax profit fell 76.3 per cent on an underlying basis to £4m, on sales down 3.1 per cent to £471.5m.

However, the results failed to dent shares in Carpetright, which were rose 5 per cent to 686p in London trading, as they came within the range set out by the retailer following a profit warning in April.

“It’s still going to be very tough,” Darren Shapland, chief executive, said of trading conditions in the current financial year.

Presenting his first set of results since taking the helm last month from founder Lord Harris of Peckham, who remains as chairman, Mr Shapland confirmed that the company would maintain its strategy of “self-help” by honing its store estate, although he ruled out mass closures.

The homeware sector has been one of the hardest hit on the high street, in part due to its close relationship with a depressed property market and as customers put off non-essential refurbishments.

The company has “a solid management team, with a correct strategy in place, however, UK macroeconomic conditions are not favourable”, said Amisha Chohan, analyst at Merchant Securities.

Carpetright, which operated from 490 outlets in the UK at the end of April, recorded 49 net closures in the period, although it said this was unusually high as around a third of these had been concessions in Focus DIY, the chain that entered administration last year.

However, Mr Shapland added that 88 leases due to expire over the next five years left room for some closures. “It’s not a radical reshaping of the estate or significant downsizing,” he said.

Carpetright also said the sale and leaseback of the properties had helped reduce net debt from £65.7m to £19.1m as the company looks for ways to boost cash as consumers delay spending on home improvements.

Sales in the UK, which account for more than three-quarters of group revenue, declined 3.8 per cent to £381.6m in the period.

Diluted earnings per share rose from 6.9p to 16.4p.