Tuesday, August 28, 2012

News: United Carpets shares suspended


Rotherham-based United Carpets, the second largest chain of specialist retail carpet and floor covering stores in the UK, has had its shares temporarily suspended after admitting it would not be able to publish its full-year results on time.

The Bramley-based business began action in June following a period of "extremely challenging" trading conditions for retailers.

In an update to the AIM stock exchange, United Carpets stated that a review of the group's 85 stores is being undertaken and this has led to the closure of six stores and a further 17 franchised stores being either taken back into the group or refranchised.

The review is ongoing and a further eight stores are expected to close over the next few weeks.

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.

However, the group stated previously that the: "challenging environment has led to a significant proportion of our franchise network finding it increasingly difficult to operate satisfactorily."

Negotiations have also commenced with the landlords of a number of other stores in an attempt to agree rent reductions in order to improve trading prospects and viability.

The statement added that: "the outcome of the ongoing negotiations with landlords is uncertain as is the possibility of further closures."

The impact of the closures will cost the group around £1m for impairment of property, plant and equipment as well as a significant non-cash increase in the provision against onerous contracts.

The company has decided to extend its current accounting period from March 31 2012 to September 30 2012. The board believes that "not taking this step would result in a set of accounts which would not give a truly representative picture of the group's ongoing operations."

The board concluded that they are disappointed by the need to take these actions.

United Carpets website

Images: unitedcarpetsandbeds.com


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