Reporting a fall in half-year profits from pounds 16.2m to pounds 11.6m for the six months to October, Lord Harris said sales had been on an upward trend since August and that same-store sales in November, its strongest month, were up by 7.2 per cent on the same month last year. Though sales had flattened in December, he said the outlook was encouraging.
"If we can carry on the way we are, we will be very happy," he said. "People tend to lump us in with big-ticket item retailers like furniture but our average spend is pounds 150. We're small-ticket." Lord Harris said that while people might be avoiding spending on cars and furniture, carpets appeared to be higher on shopping lists.
"We're first in a slump but we come out first too," said John Kitching, managing director.
The upbeat statement prompted a 13.5p jump in Carpetright's shares to 210.5p. Lord Harris said Carpetright was taking market share from rivals and its share of the declining UK carpet market stood at around 13 per cent. But it has cut back on its store opening programme and will only open a net two new stores in the second half.
Eight of the larger Carpet Depot stores have been converted into Carpetright, though sales in the Depot stores are holding up better than in Carpetright. Margins have been maintained and the group has returned to its policy of promotional discounting after abandoning its failed experiment with its lowest-price guarantee. "We're a discounter and we have to accept that," Lord Harris said.
Analysts added a note of caution, however, saying that much of Carpetright's gains had come from the one-off benefit of Allied Carpets' recent decision to pull out of the market for roll-stock carpet, which customers can take home on the day.
They said this flattered Carpetright's figures and the underlying picture might not be so promising. John Richards at BT Alex.Brown said: "It is not that the market has turned. They are doing well at the moment because they are killing Allied Carpets."
The company claims costs are back under control and a target margin of 15 per cent looks achievable. After 10 years of opening a store every 10 days the group is now concentrating on its existing stores, which will improve focus in a difficult year ahead.
BT Alex.Brown is forecasting full-year profits of pounds 27.5m, putting the shares on a forward multiple of less than nine. "I'm neutral on the stock. It will be a tough year, though at least Carpetright is the dominant player in a specific sector of the market."Reuse content