Carpetright 'committed' to the Netherlands despite ongoing sales slump

The retailer reported a first half £1.4m underlying operating loss in its European arm which executive chairman Lord Harris said predominantly reflected “continued difficult trading in the Netherlands”. This time last year it made £200,000 operating profit.

However, Carpetright group finance director Neil Page said: “We’re still committed to the Netherlands. We’re taking action there to improve performance in the second half.”

Page described the Netherlands as a “very tough market” and that sales across the sector had declined by 25% in the last two years. However he added that Carpetright is “performing a bit better than that”. “It’s a little bit of a game of the last man standing,” he said. “Some of the competition are shutting stores or taking floor coverings out.”

Carpetright is planning to implement in the Netherlands some of the initiatives that it has deployed in the UK, such as expanding the beds business and modernising stores. The retailer blamed the “deterioration of consumer confidence” in the country for its worsening performance.

Carpetright’s European business comprises 95 stores in the Netherlands, 26 in Belgium and 21 in Ireland. Like-for-likes in the division slumped 8.6% in the 26 weeks to October 26.

The UK arm performed better thanks to self-help initiatives, according to Page. Operating profit rose 5.8% to £5.5m, and like-for-likes were flat in the core retail business.  Gross profit percentage increased by 140 basis points to 63.1%

Harris, who came out of retirement to lead the business after chief executive Darren Shapland stepped down in October, said he was “enjoying” being back in the driving seat. He added he wanted to focus on growing the top line.

“I’ve driven sales before in a tough market,” he said. “We’ve got very good ranges, the new formats are good and we’ve done a good job on digital sales.”

Harris said he was confident the business would meet its profit targets for the year. He added that there was no update on the retailer’s search for a new chief executive and that he was planning to stay at the helm for 12 to 18 months.

Page said the business was “cautiously optimistic” on the outlook due to the “encouraging signs” in the economy on the macro level, including an improving housing market.

However, he cautioned that this would “take time to filter down to consumers”. He added: “We’re not seeing it come into the numbers yet.”

Page said the first half had been very volatile and that this was “incredibly difficult to manage”.

Page said that Carpetright was still consulting with the Office of Fair Trading over its investigation into flooring and furniture retailers’ practices regarding promotional sales.