Carpetright PLC (LON:CPR) shares jumped higher first thing as although the floor coverings retailer reported a drop in full-year profits and a near-halving in sales growth but said it saw a “positive trading momentum re-established in second half" and an "encouraging start to new financial year".
The small cap firm saw its statutory pretax profit slump to £900,000 in the 52 weeks to April 29, down from £12.8mln a year earlier, although the fall in underlying pretax profit was less severe, down to £14.4mln from £18.3mln in the previous year, in-line with its expectations.
The group reported overall like-for-like sales growth of 2.5%, down from 4.8% growth a year earlier.
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Its full-year UK like-for-like sales growth slowed to 0.5%, down from 2.8% a year earlier, but the firm flagged a “significant improvement” in the second half, with like-for-likes sales growth of 1.8% after a 2.8% fall in the first half.
Carpetright added, after the period-end, UK like-for-like sales grew by 2.0% for the seven weeks to 17 June 2017, with its refurbished stores continuing to outperform the un-invested estate.
The company’s net debt jumped to £9.8mln by the year-end, up from £1.1mln a year earlier, reflecting the cost of the firm’s store revamp.
READ: Carpetright downbeat as UK conditions toughen
Carpetright CEO, Wilf Walsh said: “We have made an encouraging start to the new financial year, underpinned by the improving performance of our refurbished UK estate.
“While a challenging consumer environment and competitive landscape remain headwinds, we are confident the additional potential in our self-help initiatives will support an increase in market share.”
Investors took the news bullish, with Carpetright shares leaping 11%, or 20p higher to 200p in early morning trading.
Independent retail analyst Nick Bubb said: “After the recent DFS warning you wouldn’t have wanted to bet against Carpetright CEO Wilf Walsh having to follow suit in the outlook statement with today’s finals for y/e April, but the news is surprisingly good…”
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