Carpetright Annual Earnings Inch Up

Rainham, England, June 26, 2007--Carpetright reports pretax profits up 4.4% from £64.2m to £67m in the 52 weeks to 28 April, although the underlying growth, stripping out property profits, was only 1.8%, from £56.7m to £57.7m. Start-up losses of £900,000 in Poland detracted from the figures.

Sales rose 5.4% to £475.9m, with a boost from the Continent, where sales grew 7.6% as the chain expanded. The sales picture in the home base of UK and Ireland was less encouraging, with the total up only 5.1% despite a net increase of 83 stores to 621 last year. Like-for-like sales slipped 1.4%.

The final dividend of 30p gives a total 50p, up from 49p in the previous financial year.

Chairman and chief executive Lord Harris professes to be pleased to report ‘another solid year’.

He says: ‘I am now in my 50th year of selling carpets and remain as enthusiastic as ever. We continue to invest in the future and I am confident that our strategy of providing a comprehensive offer with the widest product range, best prices and excellent customer service should support future growth.'

However, he concedes that in the latest period a reasonably strong first half was offset by a tougher than expected second half.

Manufacturers and retailers have seen the decline in the domestic floor covering market accelerate since the start of 2007 and Harris believes that many independents have ceased trading, allowing Carpetright to gain market share.

The trend to heavier and higher quality carpets at higher prices has also helped.

The laminate and wood market, which accounts for only 2% of the business, appears to have stabilised following several years of decline and Harris is happy with the group’s performance in this area.

Rug sales have doubled to over 2% of sales and the medium term target is to grow rug sales to nearer 5%.

Carpetright shares staged a strong recovery ahead of the results but they ran into profit taking in early trading, dropping 35p to 1200p. We are concerned that sales are being driven largely by store openings, with progress on the continent masking the difficult retail environment at home.