Carpetright saw solid LFL sales growth, improved customer sentiment, and favourable forex
Companies: Davide Campari-Milano N.V.
Europe's largest carpet retailer Carpetright Plc on Tuesday released a trading update for the third quarter showing solid like-for-like sales growth, improved consumer sentiment, and robust performance in Europe.
In a positive update, the firm said it had returned to quarterly sales growth in the UK and that sales in the rest of Europe had been robust and had benefitted from favourable forex rates.
In the UK, LFL sales for the quarter rose 1.9% and LFL sales in the last four weeks rose nearly 7%. LFL sales in Europe, primarily Netherlands, Belgium, and the Republic of Ireland, increased 5.4%, a 22% increase in reported currency.
CEO Wilf Walsh said he was pleased the firm had returned to quarterly sales growth, confirming that the business' outlook was positive and the Board remained confident with the current range of market expectations:
"We are pleased to announce a return to quarterly like-for-like sales growth in the UK. Our trading performance over the last four weeks, with like-for-like growth of 6.8%, gives us confidence that our turnaround strategy is on track."
The firm opened 2 new stores during the period, bringing the total in the UK to 427 and in Europe to 138. Of these, 120 (UK) stores are trading under the new brand identity, delivering sales growth above the older stores:
"The refurbished stores with our new brand identity continue to outperform the un-invested estate and we are confident of hitting our target of 150 stores - representing over one third of the UK estate by the financial year-end."
Old branding
New branding
Broker N+1 Singer said CPR's comprehensive transformation was gaining traction, and the effects of key changes and targeted investment were encouraging:
"... today’s update shows LFL orders up 1.9% in the UK. This lifts the 2-year rate of growth to 8% (vs 0% in Q1, 4% in Q2) despite less optimal weather conditions and a slightly smaller transfer uplift from store closures (phasing). Growth in the 4 weeks to 28 Jan was +6.8% LFL – a milestone in terms of performance on the back of the self help. Gross margin guidance remains unchanged (150-170bps decline).
FX related price increases (affecting c25% of sales) have thus far been passed on successfully; at a unit level this ranges anything up to c8%. This also appears to be the case at Headlam (supplier to independent retailers)."
Carpetright's share price increased 6% on Tuesday.
