Carpet and floor coverings retailer Carpetright has reported a fall like-for-like sales, although new rebranded stores are delivering growth.
According to its latest trading update for the 25 weeks ended 22 October 2016, like-for-like sales were down by 2.9%, whilst total UK sales fell by 5.5%. Despite the lull in its UK performance, Carpetright saw its Rest of Europe like-for-like sales, in local currency terms, grew by 0.9%.
Due to a combination of increased sourcing costs resulting from the devaluation of sterling, competitive market conditions and a mix impact, the group said that full year guidance of a decline in gross profit percentage was revised to between 150 and 200 basis points.
The Group’s full year profit expectations remain unchanged at a consensus for the year ending 29 April 2017 for Group underlying profit before tax to be £18.5m, with a range from £15.2m to £20.5m.
Carpetright said that 49 stores are now trading under the new brand identity, which are ‘delivering sales growth above comparable stores in the rest of the estate’, and also confirmed that during the period it closed seven stores, whilst opening one, leaving 429 trading locations in the UK. Whereas in Europe, four opened and four closed, leaving 137 sites across the Netherlands, Belgium and the Republic of Ireland.
Wilf Walsh, chief executive, said: “Trading conditions in the UK in the first half reflect variable consumer demand and increased competitive pressures. Against this background, our plan to revitalise the UK business remains on track and we are now almost halfway towards our target of 100 store refurbishments in the current financial year, with investment in the first half weighted to the latter part of the period.
“The initial trading performance of these newly refurbished stores has been encouraging - they are outperforming comparable stores in the estate, giving us confidence that where we invest we are able to drive a material improvement in performance. In addition, the introduction of new hard flooring sections in 26 stores, has contributed to a 15% increase in laminate/luxury vinyl tile sales. We continue to make progress with our plans to reduce property costs.
“As we enter the second half, we are looking forward to implementing the next phase of our refurbishment and rebranding programme as we continue our drive to update and revitalise the business. With the benefit of recent UK investment expected to flow through as the second half progresses, further significant refurbishment work already underway and a continued improvement in the Rest of Europe, our guidance for the year as a whole remains unchanged.”