Thursday, July 24, 2014

News: United Carpets on a roll at year end

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Rotherham-based United Carpets, the second largest chain of specialist retail carpet and floor covering stores in the UK, has posted its first full year trading report since a significant restructure and reported profits on the back of increasing sales.

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

The restructuring, which saw a number of under-performing stores and franchises close, helped to improve profit margins and reduce distribution costs and administrative expenses including rent, rates and staff costs.

For the year ended March 31 2014, United Carpets saw a 2.2% increase in like for like sales with turnover reaching £21.1m and pre-tax profits of £937,000.

Peter Cowgill, chairman at United Carpets, said: "These results which show a significant improvement in Group profitability reflecting the fact that the Company's restructuring has largely been successfully completed and it is no longer held back by a significant tail of weaker stores which historically have impacted heavily on profit margins and demanded a disproportionate amount of management time.

"Today, the network of stores totals 57, down from over 80 stores two years ago, of which 46 are franchised and 11 are run as corporate stores. The Group recorded a 2.2% increase in like for like sales performance for the year which was, in our view, a satisfactory performance.

"The UK market has been better and continues to show signs that it is recovering although we believe the market remains fragile with a number of hurdles still to come such as increases in interest rates which are expected in the not too distant future. We are therefore looking to continue to develop the business whilst endeavouring to ensure that it does not become over extended."

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A small number of stores are expected to close as the restructuring concludes. The management team has moved its focus back to developing the business, refining the customer offer and driving sales and is exploring limited trials of smaller store formats.

The board believe that trading is currently patchy but that the overall picture is generally moving forward, underpinned by higher levels of employment and a more active housing market.

Paul Eyre, chief executive at United Carpets, said: "We are pleased to be announcing a good uplift in profitability, helped by an increase in like for like sales as consumer confidence increases slightly and the housing market also improves.

"This trading performance also reflects the benefits of the management actions taken two years ago to reduce significantly the size of the store portfolio, removing the majority of under-performing stores, re-focusing the business on a core network of stores and giving the Company a stronger financial base from which to operate."

No dividend is proposed but a capital restructuring proposal would enable the company to reduce the issued share capital and cancel the share premium account. Eliminating the deficit on the company's profit and loss account would create distributable reserves in the company to facilitate the future consideration of payment of dividends to shareholders. The proposal would need signing off by the High Court.

United Carpets website

Images: United Carpets

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