Sir Phil cleans up with 79% profit leap: Carpetright to open more stores in anticipation of further growth

CARPETRIGHT, the retailer floated by Sir Phil Harris last June, celebrated its first 12 months as a public company with a 79 per cent jump in pre-tax profits for the year to April. The shares, floated at 148p, closed 6.5p lower yesterday at 249.5p.

Sir Phil, the driving force behind Harris Queensway in the mid-1980s, said trading had continued to improve since May.

He expected it to benefit from a stronger housing market despite recent reports from several housebuilders of slower sales.

Carpetright, founded within months of Sir Phil selling out to Sir James Gulliver in 1988, opened 31 stores, taking the total to 149. A further 30 openings are scheduled for the current year, with 250 shops and a 20 per cent market share of the medium-term target.

Sir Phil said: 'We plan to open 30 stores a year over the next few years and to be in a position to challenge Allied Carpets as Britain's number one carpet retailer.'

Pre-tax profits, up from pounds 7.8m to pounds 14m, benefited from sales growth of 40 per cent to pounds 110.4m. Underlying growth was 16 per cent with the rest coming from new openings.

The rate of growth, faster than expected at the time of flotation, helped to push Carpetright's market share up from about 6 to 9 per cent. Expansion was funded out of strong cash flow, which saw reserves rise from pounds 8m to pounds 13.7m despite capital expenditure of pounds 5.3m.

Following a 25 per cent increase in trading area and a 12 per cent jump in sales per square foot, gross margins edged ahead to 46.1 per cent (45.4 per cent).

Sir Phil said the floorcoverings market still remained below its 1990 peak. He expected some growth over the next two years.

(Photograph omitted)