Carpetright reported a positive first quarter aided by wet weather driving shoppers in store. The City welcomed the ‘solid’ set of results.
“Management have indicated that the UK gross margin has improved in line with expectations. UK costs also continue to be managed tightly and they indicate that with the first quarter in line, their expectations for the year as a whole remain unchanged. Prior to today’s announcement the consensus 2013 full-year pre-tax profit estimate was £9.2m and we do not expect significant changes to consensus estimates at this stage.” - Matthew McEachran, Singer
“The UK stores performance continues to benefit from self-help measures, notably the performance of beds, laminate and the refurbishment programme. Carpetright has completed 63 refurbs to date, with the average sales uplift up to 10% against the peer group. Uk performance remains encouraging, with the second quarter perhaps a better measure of underlying performance as weather patterns improve. Nonetheless, given expectations of gross margin improvement, we expect UK EBIT to more than double to around £7m over 2013. Forecast risk has shifted to Europe, with Netherlands requiring a stronger second half to meet full year pre-tax profit expectations.” - John Stevenson, Peel Hunt
“Like-for-like sales in the UK increased 1.7% year-on-year, reflecting a combination of the development of the group’s bed proposition, extension of the laminate range, the refurbishment of additional stores (63 in total out of the 470 existing stores) and the benefit of the unusually wet weather which arguably helped to drive traffic to stores. In the rest of Europe business, sales growth was experienced in the Republic of Ireland and in Belgium in local currency terms, with the shortfall in the top-line in the Netherlands only.
“However, the deterioration of the euro relative to sterling has resulted in the -6.3% like-for-like decline increasing to a 13.6% fall year-on-year overall in the European business. On a more positive note, management has repeated guidance that gross margins will be in the range of 200-250 basis points higher than in full-year 2012 in the current year as a whole, which augurs well for the continued recovery in profitability which gathered pace in the second half of 2012.” - David O’Brien, Shore Capital