Carpetright blames profit drop on fall of pound
Published: 13 December 2016 - Jenny Wonnacott
First half profits plummeted by 42% at Carpetright as the retailer suffered the consequences of the weak pound as well as a downturn in sales.
Carpetright has seen a rocky start to its financial year
Pre-tax profits for the six months to October 29 stood at £4.1m, down by 42%, while like-for-like sales fell by 2.9% compared to the same time last year. Revenue decreased 3.8% to £222.3m.
Chief executive Wilf Walsh blamed the downturn on the collapse of the pound's value since Brexit, which has boosted the cost of the goods it imports. He added that the retailer is currently facing "trading headwinds."
Carpetright shut down six underperforming stores during the trading period, bringing its total to 429. It is also shifting its focus towards hard flooring in an attempt to cash in on the category's double digit growth. By the end of the first half, the retailer had 49 stores trading under new brand identity, delivering sales growth "above comparable stores in the rest of the estate." Plans are underway to accelerate the programme to 150 stores by the end of the year, which is 50% more than the original target.
Mr Walsh described the first half as "challenging," adding that the "full impact of the UK decision to leave the EU remains unclear."
He pointed out that consumer demand "remains uneven," that the market "is extremely competitive and the impact of currency movements have combined to give us substantial trading headwinds."
The start to the second half has shown more positivity, with a return to like-for-like sales growth. With this in mind, Mr Walsh said that he remained confident the retailer could "capitalise as market leader to the full."