Carpetright swings to a loss as costs of store closure programme bite
©Archant Photographic 2009
A battle with rapidly declining sales and a rescue bid involving store closures have pushed Carpetright into the red.
The retailer made an underlying loss before tax of £8.7m for the year to April 28, following a profit of £14.4m the year before.
Its statutory loss before tax was £70.5m, compared with a profit of £900,000 a year earlier, which the firm said was driven by the cost of its store closure programme.
The company announced in April that it would shut 81 stores, including in King’s Lynn and Great Yarmouth, after a Company Voluntary Agreement (CVA) was approved.
Hundreds of jobs are expected to be lost in the closure programme, due to by completed by the end of September.
Carpetright has a further 36 stores across East Anglia including in Norwich, Ipswich, Lowestoft, Thetford and Sudbury.
Group revenue fell by 3% year-on-year, down to £443.8m from £457.6m.
Like-for-like sales in the UK were down by 3.6% – with the sales decline accelerating from 0.7% in the first half of the year to 7.8% in the second half.
The firm said trading was “heavily impacted” while it was putting together its CVA as some suppliers withdrew their supplies, leading to stock shortages.
Net debt jumped to £53m, up from £9.8m, which Carpetright said was due to suppliers tightening their credit terms in response to the distress in the business.
Wilf Walsh, Carpetright’s chief executive, said: “After a difficult trading year impacted by reduced consumer spend, increased competition and the legacy of an unsustainable, over-rented store portfolio, the CVA and recapitalisation offers us the chance to rebuild Carpetright which remains the clear market leader in floor coverings with outstanding consumer brand awareness.
“This will be a transitional year for the group as we work through our recovery plan.”
The retailer also secured £65m of equity financing to fund the business while it carries out store closures.