Retailer told investors that conditions were tough across the sector
Companies: Davide Campari-Milano N.V.
UK-based carpet retailer Carpetright has told investors that tougher trading conditions in the UK mean that it will likely deliver FY profit towards the lower end of market expectations for 2017.
Consensus data was forecasting around £454m in revenues, with a net profit of £11.6m, and normalised EPS of around 17p (a 12% fall YoY). Like-for-like sales were up 1.4%, with tough trading conditions in the UK but improving economic confidence in the rest of Europe.
Broker N+1 Singer said that 1.4% LFL sales growth reported on Tuesday was slightly shy of its expectations, attributing it to a weaker trading environment:
"This performance is slightly shy of our expectations due mainly to a weaker trading environment (N+1E +3% and +5% respectively) albeit a further 6% of the UK estate has been refurbished vs prior guidance which will have created a bit of additional drag from disruption in the period and which is positive for FY18 and beyond. Critically, those stores that have annualised new competitor Tapi openings traded well into positive LFL territory, which is a key milestone in the turnaround."
Analyst Matthew McEachran added that while trading this week could change the outcome, FY17 forecasts look likely to be reduced by 4%.
CEO Wilf Walsh said the whole home improvement sector had experienced tougher trading conditions in the past quarter, before adding that LFL sales had grown 1.4% during the period:
"Trading in the Rest of Europe was in line with our expectations, underpinned by a continuing recovery in economic confidence, particularly in the Netherlands.
"Whilst we remain confident in our turnaround plan, the level of sales growth in our final quarter leads us to expect that full year profits will be towards the lower end of the current range."
He continued that the firm had now completed 188 store refurbishments, beating its 150 store target, which accounted for 40% of its estate. He also said that despite tough trading conditions, the improved performance in the refurbished stores had encouraged the Group to continue its programme.
Shares in Carpetright fell 6% early on Tuesday, but the stock is still trading up 50% since the start of 2017.
