Carpetright has reported to an annual loss of £70.5 million that is driven by weak trading and the costs of a major restructuring of the business that involves the closure of 92 of its stores.
The troubled retailer said that it had been “a very difficult year” for the company as it reported a 3.6 percent decline in its sales at its established stores in the United Kingdom in the year to the 28th of April.
Carpetright said that the trading during the first eight weeks of the current financial year had been disrupted by the restructuring programme of the company heavily, especially since some suppliers had withdrawn some products. The firm said that the hot weather had also kept customers away.
Last April, the retailer announced its plans on the closures of the stores, placing 300 jobs at risk. It has also requested rent reductions of up to 50 percent to the landlords on 113 more stores under a company voluntary arrangement (CVA) A CVA is a process that is designed to stave off administration as its is struggling against a backdrop of a slowdown in the housing market and weaker consumer spending.
Announcing the said loss, Wilf Walsh, the Carpetright chief executive, said that the company was concentrating on working through its recovery plan. The loss was followed a pretax profit amounting to £900,000 a year earlier.
He stated: “After a difficult trading year impacted by reduced consumer spend, increased competition and the legacy of an unsustainable, over-rented store portfolio – the CVA and recapitalisation offers us the chance to rebuild Carpetright, which remains the clear market leader in floor coverings with outstanding consumer brand awareness.”
By the end of this coming September, Carpetright anticipated the closure of 81 of the 92 stores that were earmarked for closure. Revenue over the year to the 28th of April dropped by 3 percent to £443.8m.
An analyst at CMC Markets, David Madden, stated that this year, things had gone from bad to worse for Carpetright.
He stated: “Carpetright has had a difficult few months … in 2018, as the company had more than its fair share of profit warnings, which has taken its toll on the share price.”
He added: “The good news is that the CVA has given the company some much-needed breathing space.”
The shares in Carpetright dropped by 2 percent after the results were announced.