London, England, August 8, 2006--The U.K's biggest retailer of carpet and floor coverings, Carpetright PLC said like-for-like sales in the U.K and Republic of Ireland fell 0.3% in the first quarter, due to unseasonably warm weather.
Chairman and chief executive Philip Harris said: "Sales were strong in May, but June and July were adversely affected by the unseasonably hot weather across the U.K. and Europe." He added that August "has started encouragingly."
Total sales in the U.K. and Republic of Ireland increased 4.3% over the 13-week period, while sales in the rest of Europe rose 9.1%. Like-for-like European sales - which exclude new store openings and store closures - increased 3.9%, the company said.
Group finance director Ian Kenyon told Dow Jones Newswires in an interview that he expects people to come back and shop when the "weather comes back to normal again."
Seymour Pierce analyst Richard Ratner said that "expectations are that many purchases will have been deferred until later in the year, where like-for-like growth should be seen."
CEO Harris said Carpetright continues to expand its store base and has improved gross margins. He said the company is starting to see a "softening" in rental cost inflation for "the first time in many years".
FD Kenyon said a further softening is expected in 2007.
He added that there is no clear program for cost cutting at Carpetright but that management always concentrates on saving on rent by downsizing, reducing energy used, or checking staff numbers.
Carpetright shares opened up 1.6% at 1233p but then fell back slightly. At 0757 GMT, they were up 1% or 11 pence at 1225 pence in a higher broader London market.
Carpetright opened 39 new stores and closed three in the U.K. and the Republic of Ireland, taking the total number to 476 stores including 57 concessions. It also opened a store in the Netherlands, giving a total of 575 stores operating from the U.K., Ireland, Belgium, Poland and The Netherlands. The retailer has 99 stores in Belgium, the Netherlands and Poland to date, and plans to open a further 12 international stores, including six in Poland, throughout the year.
One analyst, who described space acceleration as "very important in this business", said Carpetright's 5% to 6% space acceleration was "significant".
Carpetright has an established concessions pipeline for this year, including a concession expansion within department store chain House of Fraser PLC. The retailer, which already has 16 concessions in department store Debenhams PLC, has agreed to open concessions in 19 HoF stores. The group's concessions total 57 as of July 29.
Carpetright started rebuilding its concessions business last year, after the closure of its Allders concession business in March 2005.
The company didn't give an update on benefits from the internet site launched during the preliminary results. Carpetright said then it wasn't looking to increase revenue from the internet site, which it expects to be used as an information tool by customers.
CEO Harris said the company plans to move into other European countries, such as the Czech Republic and Hungary.
The company will release a pre-close trading statement ahead of its interim results on October 24.
