Carpetright profits on a roll

Floorings firm Carpetright returned to bottom line profit for the first time in three years on the back of a recovery in UK sales and a turnaround at its continental stores.

The firm, which has 460 UK shops and 18 in Ireland, posted statutory pre-tax profits of £6.6m in the 53 weeks to May 2, against a loss of £7.2m.

Underlying pre-tax profits jumped almost three times to £13m as the group put a series of profit warnings behind it. Shares lifted 5%.

It said in the UK like-for-like sales jumped 7.3% from falling 0.2% the previous year in its best sales performance for five years, leading underlying operating profits to lift by a third to £14.3m.

The retailer, under chief executive Wilf Walsh, has focused on a more contemporary market, and has kept discount levels under tight review while also introducing interest free credit to the business on St Stephen's Day.

It has launched a trial of smaller high street stores, which will feature a sample only premium product, and has emphasised the importance of the internet for driving customers into its shops.

In Europe, where it runs 137 shops, same store sales lifted to 0.3%, compared with a 8.6% fall a year ago as the group focused its shop portfolio. In Europe the firm’s stores are in the Netherlands, Belgium and Ireland.

In the UK it opened 12 stores and closed twice as many, while across Europe it opened three and closed eight in the period.

Mr Walsh took the helm of the business last July from founder Lord Harris of Peckham. He was previously managing director of bookmaker Coral.

He said: “The group has delivered substantial growth in profit, strong and consistent like-for-like sales growth in the UK, a return to profit in the Rest of Europe and a net cash position at the end of the period.”

He said the firm was investing £4.5m upgrading its IT systems and had introduced a new rug range.

The firm added its advertising was less price-led and said it would update its brand positioning to something “that is more in tune with the contemporary retail market”.

The group said its current UK trading saw like-for-like sales 4.9% ahead of the year before, with European same store sales up 7.4% over the same period.

Brenda Kelly, head analyst at London Capital Group, said: “The recovery plan being implemented seems to be working. The shares have gained around 50% year to date.”