Carpetright, Britain’s biggest floor coverings retailer which is considered a barometer of the mood on the high street, said it had returned to sales growth as it reported pre-tax profits rose 15.8 per cent to £11 million in the first six months of its financial year.

Lord Harris of Peckham, chairman and chief executive of Carpetright, said: “Despite the continued uncertainty about economic recovery, we believe we are growing more quickly than the market in all our territories, reflecting the appeal of our value for money proposition.”

He said that the company had “made a good start” to the second half and was confident about further progress.

Like-for-like sales in the UK turned positive, growing 3.9 per cent in the six months to the end of October — the strongest half-year performance since 2004. The chain’s sales plunged in its last financial year as the bottom fell out of the housing market and consumer confidence waned.

Lord Harris said UK growth had been helped by the demise of rival Allied Carpets which was put into administration in July, but also by the recovery in the housing market, as people moving house bought new carpets. He said the underlying sales recovery “correlates closely, on a lagged basis, with the improved mortgage approval figures.”

The company has grown its UK and Ireland stores from 567 to 590 during the six months, including 124 Sleepright stores which sell beds.

In the Netherlands and Belgium, where the group has 116 stores, sales fell 3.8 per cent against a dismal market estimated to have fallen by around 15 per cent.

Carpetright has decided to pull out of the Polish market where it has failed to make significant profit in four years of trading. It took a £2.5 million hit for writing down the value of its 12 stores there and it has so far closed four of them, with the rest expected to close by early next year. The Polish stores made a loss of £800,000 in the half year, against £600,000 losses a year ago.

Higher profits and reduced capital expenditure meant it also managed to bring net debt down by £23.7 million over the six months to £73.4 million.

Carpetright is doubling the interim dividend to 8p.

John Stevenson, an analyst at KBC Peel Hunt said: “With a combination of new revenue streams, the Allied Carpets collapse and rising housing transactions, we expect the second half to strengthen further.”

Ramona Tipnis of Oriel Securities said: “The Polish market was struggling to get to critical mass and the decision to close stores rather than sell the business reflects the fact that Poland was always going to be a very difficult market to crack.”

Source : The Times

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