Carpetright PLC (LON:CPR) shares soared in early deals on Thursday after it issued an upbeat trading update following a challenging year.
The flooring retailer, which has been trying to turn itself around after barely escaping collapse last year, said trading in the 12 weeks to 20 April had been in line with expectations, while UK like-for-like sales trends in the quarter had “improved significantly” compared to the entire fiscal year to date.
READ: Carpetright CFO Neil Page to step down from struggling retailer amid turnaround plan
In the rest of Europe, the company said trading had continued to track ahead of the same period last year, driven mainly be a strong performance in the Netherlands.
The group added that it remained on target to achieve £19mln in annualised cost savings across is current fiscal year, which is due to end on Saturday.
Wilf Walsh, the company’s chief executive, said it remained “on track” with its recovery plan and that while UK consumer confidence remained “challenged”, the work to reposition the business was starting to deliver benefits that would “put Carpetright back on the path to sustainable profitability”.
Investors reacted strongly to the upbeat assessment, with shares shooting up 28.7% to 19.7p.
Back in 2018, Carpetright seemed set to join the rank of other high street retailers after falling consumer confidence hammered its sales and forced it into a company voluntary arrangement (CVA) with creditors last April to avoid falling into administration.
READ: Carpetright receives shareholder approval for CVA, expects 2018 loss
Since then, the company has embarked on a dramatic restructuring programme that has seen it shutter over 60 of its underperforming stores while investors have had to fork over £60mln to support its efforts.
More closures expected in new fiscal year, says house broker
In a note to clients, analysts at Carpetright’s house broker Peel Hunt said following the restructuring, the company was likely to reduce its overall estate further in the new fiscal year as it focused on more profitable stores.
The broker added that while there was still “much to be done”, the £19mln in cost savings and the store closures last year meant Carpetright would enter the new financial year with “a much more stable platform for recovery”.
The sentiment was echoed at non-house broker Shore Capital, which said the company had “given itself a fighting chance” through its restructuring strategy.