- Home |
- Request a Brochure |
- Open An Account |
- Demo Account |
- Prime Markets |
- Careers |
- Contact Us |
Risk Warning
29/10/2009
Shares in Carpetright dipped yesterday despite the country's biggest floor coverings retailer reporting a boost from growing housing activity as it posted a second straight quarter of rising sales.
Lord Harris of Peckham, the chairman and chief executive, said the overall floor coverings market fell over 20 per cent in the last six months but first-half profit would beat current market expectations of £10m. Carpetright, which has 26 stores in Yorkshire, has benefited as its rivals have struggled.
The market took a gloomy view of the chain's fall in UK margins and shares closed down 14p at 886p.
Lord Harris, the 51-year veteran of carpet selling, said yesterday: "Although we expect the overall (UK/Ireland) market to be down, we expect to have a good second half."
He said, however, that shoppers might be kept out of showrooms next year by the general election, television coverage of soccer's World Cup and tax hikes for higher earners.
Shares in retailers have been rallying amid signs the country is close to emerging from recession and stock in Carpetright has nearly doubled over the last year, outperforming the FTSE All Share General Retailers Index by 20 per cent.
Retail sales grew at their fastest pace in almost two years in October and the outlook is expected to improve further in November, industry data showed on Tuesday.
David Stoddart, analyst at Altium Securities, said: "There is no reason to anticipate a slackening of the pace of growth in the second half."
Richard Curr, analyst at Prime CFDs, said Carpetright was benefiting from a "nascent recovery" in the housing market.
"(We) see Carpetright as highly proactive in winning new business, with this point underlined by sharp sales rebounds in its main markets. The technical picture reveals a buy into any weakness from current levels down to under 900p, so on this basis Prime CFDs reiterates our September 10 buy recommendation."
Carpetright said sales at stores in the UK and Ireland open more than a year increased 5.6 per cent in the 12 weeks to October 24, accelerating from a first-quarter rise of 1.4 per cent.
The firm benefited from weak comparative numbers in the same period last year, the collapse of its main rival Allied Carpets earlier this year, increased activity in the housing market and a positive contribution from the Sleepright beds business purchased last December.
The underlying margin on the retailer's carpet business remained in line with last year, but a greater proportion of bed sales resulted in a fall of about 60 basis points in its overall gross profit percentage.
Lord Harris said new insurance business from Lloyds Banking Group, which merged with HBOS last year, and Royal Bank of Scotland, and new business from housebuilders, such as Redrow, would boost sales in the second half.
He expected analysts' consensus pre-tax profit forecasts for the year to end-April 2010 to be between £33m and £35m, up from £17.2m in 2008-09, and forecast year-end net debt of £50m to £60m and zero debt by April 2011.
Second-quarter like-for-like sales in the rest of Europe division fell 8.2 per cent, reflecting slowing economic conditions.
Securities and Derivatives markets may be subject to rapid and unexpected price movements and past performance is not necessarily a guide to future performance. Trading in these markets is generally considered to be suitable only for the more experienced investor as it carries a high degree of risk. An investor may not receive back the amount of their original investment and in certain circumstances may be liable for a sum that is greater than their original investment. If in any doubt, please seek independent financial advice.