Thursday, July 25, 2013

News: United Carpets report pre-tax profits

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Operating from a core portfolio of stores has seen Rotherham-based United Carpets, the UK's largest franchised carpet retailer, return to profit, despite a fall in like for like sales.

In August 2012, the Bramley-based group had its shares temporarily suspended after admitting it would not be able to publish its full-year results on time. In October, a pre-pack administration deal saw United Carpets Group acquire the business and assets of its trading subsidiary United Carpets (Northern) Limited.

The firm was readmitted to the AIM stock exchange earlier this year after delivering its delayed final results for the period ended October 5 2012.

Announcing its preliminary results for the six month period ended March 31 2013, United Carpets reported that revenue was £11.3m, compared to a nil figure for the 18 months ended October 5 2012 with like for like sales decreasing by 9.7%.

Profit before tax was £0.25m, compared to a loss of £0.72m in the previous 18 months.

As part of the restructuring, a review of the group's 85 stores took place following a significant proportion of its franchise network finding it difficult to operate satisfactorily in the challenging environment.

United Carpets believes that their franchise model is a critical advantage over more traditional retail networks as the business benefits from the entrepreneurial drive and motivation of the individual store owners.

The review saw the group reduce its store numbers, and this continued with eight further closures over the last six months. The group now operates 64 stores, primarily across Northern and Central England, 51 are franchises and ten corporate stores.

On the restructure, Peter Cowgill, chairman of United Carpets, said: "While the process is still ongoing, the board believes the long term impact will be beneficial as it will create a smaller, more resilient network of stores better able to trade successfully during what has been a prolonged downturn in market conditions."

Paul Eyre, chief executive of United Carpets, added: "These results show we are beginning to move in the right direction, we have reduced the size of the business in response to a very tough market environment and currently operate from 61 stores. This number may reduce further as we increasingly focus on our core portfolio of stores capable of operating successfully in this market. We are pleased to report a profit for the period and we hope to build on this going forward."

After coming through a particularly difficult period, the board gave its outlook on the future. Peter Cowgill, said: "Combined like for like sales performance has improved significantly for the 16 weeks since the period end but remains 2.9% down although Flooring like for like sales were positive prior to the recent fortnight of exceptionally hot weather.

"The group remains debt free, has reasonable cash reserves and stock levels and therefore can look forward with a degree of confidence that it can continue to make good progress in the current financial year on the basis it has established firmer foundations to meet the challenges of the current market environment."

United Carpets website

Images: United Carpets

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