Harris rolls out dividend increase at Carpetright

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The Independent Online

Carpetright, Britain's largest carpet and flooring retailer, yesterday promised to be even more aggressive on pricing as the popularity of laminate flooring revived its sales.

Lord Harris of Peckham, the chairman, netted £5m when he announced a 12 per cent increase in the company's total dividend on the back of his confidence in the group's prospects. Investors will receive a second-half dividend of 22p a share, taking the total dividend to 37p. Lord Harris has an 18 per cent stake in the company.

Sales in stores open at least a year rose 2.2 per cent in May and June after a poor six-month spell. Sales fell into negative territory in March when consumer confidence hit rock bottom, and were up 7 per cent over the year. Pre-tax profits for the year slipped to £50.9m from £52.5m in 2002.

Lord Harris said: "We have increased operating margin to 15 per cent for the first time. The business has made a significant improvement over the [past] year and despite uncertain market conditions, we believe we can continue to grow sales and profits going forward."

The company has 351 stores and a 25 per cent market share in Britain and Ireland. Sales in the UK rose 2.6 per cent, while profit margins widened by 1.6 per cent to 59.6 per cent, the third-highest of any British retailer. Carpetright has managed to improve profitability by cutting more carpet using its own facilities and introducing more expensive products, such as Kosset Gold, which now has weekly sales exceeding £200,000. Lord Harris said he would improve pricing even further to maximise the company's improved cost base.

Sales in Europe, however, have struggled to take off and have hampered profits growth in the group. It bought a home furnishings and flooring business in the Netherlands and Belgium last year, which accounts for 11 per cent of revenues. But Lord Harris said sales had been "slightly below" its expectations. It has 90 stores on the Continent and wants to double its market share to 6 per cent within three years.

Carpetright shares closed up 4.1 per cent at 637p on the positive trading news. Revenues were up 21 per cent to £436.8m.