Embattled retailer Carpetright reported widening half-year losses this morning, as it slashes costs and closes tens of stores in an effort to rescue the business.
Statutory losses before tax dropped to £11.7m in the six months to the end of October, plunging from losses of £0.6m when compared with the same period in the previous year.
Group revenue tumbled 15.7 per cent to £191m, falling from £226m in the same six months last year.
Meanwhile, like-for-like sales declined 12.7 per cent over the half, as challenges around stock availability, negative sentiment associated with the restructuring process and weak consumer demand weighed on the firm.
Why it's interesting
Carpetright's share price has dived from 170p at the start of the year to just 16p, with weak consumer demand and the costs of a major restructuring plan blighting the flooring company over the last six months.
Yet analysts found some encouraging points to take away from today’s set of results. Higher losses and lower sales were largely expected, as the firm embarks on an insolvency process that involves the closure of 81 stores.
One of the key problems facing Carpetright, as with many retailers, has been the size and shape of its estate. However, the company said today it has reduced its average store lease length down to 3.5 years, with 52 per cent of the stores now having an option to break after two years.
Management also added that it was on course to deliver the £19m in annualised cost savings from the store closure programme.
Shore Capital analysts said: “In terms of the outlook, the restructure unfortunately comes at a time of increased uncertainty for the UK consumer with the process around the exit from the EU ongoing. This is especially unhelpful in what was already a challenging market. However, the transition plan is on track and management see itself as well-placed to deal with the challenges ahead.”
Comments from the boss
Carpetright chief executive Wilf Walsh said: “This is a transitional year for Carpetright as we work through our restructuring plan. We remain on schedule and are confident that this activity is already starting to yield benefits. This is the first stage in returning the Group to sustainable long term profitability.”