Carpetright released its full-year figures, and they were broadly in line with expectations.
Revenue slipped by 3% to £443.8 million, while the consensus estimate was £450.85 million. The underlying pre-tax loss was £8.7 million, and in April the company announced it expected to register a loss of between £7 million and £9 million. The net debt position soared by 440%, which is concerning seeing as the last thing the company needs is rising debt repayments.
Carpetright has had a difficult few months. Things have gone from bad to worse in 2018, as the company had more than its fair share of profit warnings, which has taken its toll on the share price. The company has major restructuring to do. In April, it announced plans to shut 92 stores as part of a company voluntary arrangement (CVA), and today the firm revealed it will close 81 stores by September. The arrangement will also see the company receive a discount on rent from landlords.
The group confirmed that separately reported items was £61.8 million, up from £13.5 million, but that was largely driven by restructuring costs. Trading at the start of the new financial year remains subdued, and that was blamed on the disruption caused by the reorganisation of the business.
High street retailers are having a difficult time as higher business rates and staffing costs are eating into margins. Consumer’s disposable incomes are under pressure from relatively high inflation. In January, the company confirmed that like-for-like UK sales for the 11 weeks until mid-January fell by 3.6%. In April, the firm announced that three month like-for-like sales declined by 10.5%. The retail environment is fragile at the moment, and Topps Tiles, who are also connected to the housing market are having a challenging time too.
The good news is that the CVA has given the company some much needed breathing space. Earlier this month, the firm raised £60 million in capital via a share issue, and it had a 92.1% take up rate, which indicates how optimistic shareholders are.
Now that the balance sheet has been beefed up, investors will be keeping an eye on the progress of the company’s turnaround. Carpetright has a long recovery ahead of it, and given the support it has from stakeholders, the changes of a rebound are good.
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