ANALYST REACTION

Retailer Carpetright has seen profits collapse after UK sales dipped and it booked a hefty exceptional charge linked to store closures.

The company, which has 36 shops in Scotland, said pre-tax profit plummeted 93 per cent to £900,000 in the year to 29 April, down from £12.8m.

Exceptional costs, linked to closing loss-making stores, totalled £13.5m.

Overall revenue, which includes its European arm, was broadly flat at £457.6m, but UK sales fell 2.6 per cent to £381m.

Chief executive Wilf Walsh said: “I am pleased to report on a year of significant strategic progress, as we implemented a wide-ranging programme of investment and operational change, to refresh and update the Carpetright brand.

“While a challenging consumer environment and competitive landscape remain headwinds, we are confident the additional potential in our self-help initiatives will support an increase in market share.”

Neil Wilson, senior market analyst at ETX Capital, said

0 The business said all its sites in the UK will have upgraded by end-2018

“Any turnaround has to be viewed in the context of a very tough market that might get tougher yet as inflation climbs and wages fail to keep pace.”

NEIL WILSON, ETX CAPITAL Carpetright “boasts that it’s turning things around but a collapse in reported profits suggests otherwise”.

He highlighted “some pretty horrid numbers on the face of things,” adding: “Even when you strip out the one-off items, underlying operating profit doesn’t look great – down 20 per cent to £16.4m.”

Like-for-like sales in the UK fell 0.5 per cent, but Carpetright said it bounced back in the second half of the year. It also reported like-for-like sales growth of 2.5 per cent in the rest of Europe, from 4.8 per cent in the prior year.

The business, which was founded in 1988, listed on the London Stock Exchange in 1993 and has more than 3,000 staff, also highlighted its “accelerated” store upgrade programme.

It said nearly 50 per cent of UK branches were trading under the new brand identity by the end of the financial year, and it was set to complete the rest of these by the end of 2018.

Carpetright added that it had made an “encouraging start”