Friday, July 24, 2015

News: United Carpets on firm footing


Rotherham-based United Carpets, the second largest chain of specialist retail carpet and floor covering stores in the UK, says that it has created a new base for delivering sustainable growth following positive trading.

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.

In its preliminary results for the year ended March 31 2015, the group reported a 29% increase in profit before tax to £1.21m, with like for like sales up 2.7% for the year.

Like for like sales increased by 2.7% with revenue for the year at £19.1m, down from £21.1m in the previous year.

The statement added that trading in the period had been positive, benefitting from an improving consumer environment and the restructuring undertaken in 2012.

At the end of the financial period, the network of stores totalled 63, down from more than 80 stores just over two years ago, of which 47 are franchised and 14 are run as corporate stores. Since then more stores of opened so that the total now stands at 63.

The statement said: "While the majority of stores are showing encouraging signs for the future, there remains a handful of stores which are underperforming. We are evaluating ways to address this, which may include a small number of further store closures. At the same time we are employing a small and highly selective store opening policy including the opening of our smaller format store concept which, while still in its infancy, is showing some promising signs."

The Rotherham store recently relocated to the Foundry Retail Park at Pargkate.

Gross margin was 66.8% compared to 61.7% and distribution costs and administrative expenses, which include rent, rates and staff costs at the corporate stores, reduced by £0.5m due to savings in the ongoing cost of supporting the franchise network as a result of improving performance.

A special dividend of 1p per share was paid in June and the board is recommending a final dividend of 0.25p per share in October.

Paul Eyre, chief executive at United Carpets, said: "It is very pleasing to report improving results demonstrating the success of the changes we have made and showing that we have created a new base for delivering sustainable growth and returns over the longer-term.

"Our like for like sales performance showed a creditable increase, up 2.7%, contributing to an increase in profit before tax of 29%. This, together with a strengthened balance sheet and no material borrowings means the Group is well placed for the future. This is reflected in our decision to re-introduce a final dividend for the year as part of our intention to pay a progressive dividend in line with the future growth of the business."

Looking ahead, Peter Cowgill, Chairman of United Carpets said: "United Carpets is well positioned for the future. Demand for the group's products has been consistent and the store network is becoming increasingly well balanced. The balance sheet is strengthened, there are no borrowings other than a small number of immaterial finance leases and the marketplace is improving.

"Just as importantly, the management team are also now able to focus on developing the business and implement changes such as the new sales process for beds, introduction of the smaller store format and interest free credit all of which are contributing to an improving performance. While there are still ongoing challenges which will no doubt impact the business, the board is confident that the Group is once again well positioned and looks forward to delivering sustainable growth and returns for shareholders."

United Carpets website

Images: United Carpets


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