Carpetright has revealed to Retail Week that it will only take on new stores from landlords that offer monthly rents.
The retailer has already agreed monthly deals with 20 per cent of its existing landlords. Chairman and chief executive Lord Harris said he is aiming for 100 per cent sign-up “as soon as possible”.
Carpetright’s stance is unconnected to its full-year profit warning issued after a dismal first half, but reflects the conviction that the present quarterly rent system is outmoded. “It’s what should be happening anyway,” said Harris.
The retailer recorded a 67.6 per cent fall in underlying interim pre-tax profit to£8.8 million in the first half. Like-for-likes fell 13 per cent in the UK and Ireland, and total sales declined 11.1 per cent.
Trading during November was “below expectations” and is unlikely to improve for at least 18 months and full-year profits will be “significantly below current consensus”, the retailer said.
Despite the interim performance, Carpetright buying and marketing director Martin Harris said there are no job cuts planned and envisaged “considerable opportunities” for acquisitions as weaker furniture retailers fail during the downturn.
Carpetright is cutting back funding of the Fun on the Floor marketing campaign next year after what Martin Harris described as a “pretty dreadful”£700,000 billboard campaign this year.
He wanted the posters to promote “colour and affordability” but instead they featured “insipid” and expensive carpets. “It’s the biggest waste of money I’ve ever spent”, he said.
Lord Harris was relaxed about Carpetright’s long-term prospects. He said: “Carpetright has a strong brand and we are confident in our ability to compete.”
Tight control over costs, capital expenditure, stock and cash flow will help Carpetright to ride the recession, he said.
But Panmure Gordon analyst Philip Dorgan said: “While banks have raised no issues yet, they have plenty of time to do so.”
KBC Peel Hunt analyst John Stevenson believes Carpetright can continue to increase its 30 per cent market share. “Current trading across the industry is materially worse than that reported by Carpetright”, he said.
Carpetright’s stance is unconnected to its full-year profit warning issued after a dismal first half, but reflects the conviction that the present quarterly rent system is outmoded. “It’s what should be happening anyway,” said Harris.
The retailer recorded a 67.6 per cent fall in underlying interim pre-tax profit to£8.8 million in the first half. Like-for-likes fell 13 per cent in the UK and Ireland, and total sales declined 11.1 per cent.
Trading during November was “below expectations” and is unlikely to improve for at least 18 months and full-year profits will be “significantly below current consensus”, the retailer said.
Despite the interim performance, Carpetright buying and marketing director Martin Harris said there are no job cuts planned and envisaged “considerable opportunities” for acquisitions as weaker furniture retailers fail during the downturn.
Carpetright is cutting back funding of the Fun on the Floor marketing campaign next year after what Martin Harris described as a “pretty dreadful”£700,000 billboard campaign this year.
He wanted the posters to promote “colour and affordability” but instead they featured “insipid” and expensive carpets. “It’s the biggest waste of money I’ve ever spent”, he said.
Lord Harris was relaxed about Carpetright’s long-term prospects. He said: “Carpetright has a strong brand and we are confident in our ability to compete.”
Tight control over costs, capital expenditure, stock and cash flow will help Carpetright to ride the recession, he said.
But Panmure Gordon analyst Philip Dorgan said: “While banks have raised no issues yet, they have plenty of time to do so.”
KBC Peel Hunt analyst John Stevenson believes Carpetright can continue to increase its 30 per cent market share. “Current trading across the industry is materially worse than that reported by Carpetright”, he said.
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