Carpetright to beat forecasts

Floor coverings chain Carpetright today said it is on track to smash half-year profit forecasts after enjoying a fresh jump in sales.

Total sales in the 12 weeks to October 24 rose 10.3% with like-for-like sales at its UK and Ireland stores surging 5.6%.

The rise in domestic sales was well up on the 1.4% hike in the firm’s first-quarter and also represents a major turnaround from the 13.5% slump in the year to this May.

The improvement comes amid weak comparisons against a year ago, while the retailer has also benefited from the collapse of rival Allied Carpets.

The City had expected Carpetright to deliver six-month profits of £10m (€11m) but Matthew McEachran, analyst at Singer Capital, said he expects earnings of £12.6m (€14m), up from last year’s £9.5m (€10.6m).

The group added that it opened a further 11 stores during the period, taking its total UK and Ireland portfolio to 592.

Shares in the company rose almost 1% today, although news of strong UK trading was offset by weakness at its European business.

Like-for-like quarterly sales at its stores in the Netherlands, Belgium and Poland fell 8.2%, which the firm blamed on “slowing economic conditions”.

Carpetright also warned that an increasing proportion of bed sales has seen UK gross profit margins fall by 0.6 basis points.

The company has started selling Sleepright beds in its Carpetright stores after taking control of the business in 2008.

The increase in second quarter sales pushed half-year UK like-for-like sales up 3.5%, with total sales for the 25 weeks to October 24 rising 8.9%.

Investec analyst Natalia Marisova said first-half trading was “well ahead of expectations”.

She said: “Strong performance in the UK was attributable to a gamut of factors, including the ongoing contribution of Sleepright beds business, which contributed 0.5% to UK like-for-like sales, as well as the growing ventures with insurers and housebuilders.”

However the increase in VAT in January and a subdued housing market could pose potential problems for the company in coming months, she warned.