Retailer Carpetright PLC (LON:CPR) has picked itself off the floor with a strong comeback in the second half of last year and a good start in the new year.
The floor coverings specialist, which shut more than 60 of its underperforming stores as part of a company voluntary arrangement (CVA) with creditors in April last year to avoid falling into administration, revealed that UK like-for-like sales were down 2.3% in the fourth quarter to 27 April, having fallen 12.7% in the first half and 5.4% in the second.
READ: Carpetright nails it with upbeat trading update after challenging year
In the first eight weeks of Carpetright's new financial year, UK like-for-like sales have returned to positive levels, rising 8.5%.
But for the whole of the past year, UK revenues declined 17% and European sales rose 2% to produce group revenues of £386.4mln, down 13.4% year on year, while underlying earnings (EBITDA) crashed 59% to £2.9mln.
Statutory losses shrank by two thirds to £24.8mln as large write-offs were passed through at the end of the prior year.
Net debt stood at £27.4mln, down from £53mln at the year end after a £65.1mln fundraising and cash outflows resulting from the turnaround and a continued tightening of trading terms.
More confidence in future
Chief executive Wilf Walsh said: “2018/19 was a transitional year for the business as we took tough but necessary action to address our legacy property issues and restructure the UK store estate.”
He added that the group had remained the “clear number one player in floorcoverings” and while economic and political uncertainties cloud the near term outlook for the retail sector, he said the turnaround plan "is very much on track".
Broker Peel Hunt said the underlying loss profit before tax of £16.9mln was marginally better than forecast, while the positive sales in the new year “gives confidence that Carpetright’s recovery is well underway, even if the comparatives are weak”.
“While this should be more than enough to underpin forecasts for FY20, we are cognisant of the next Brexit deadline falling squarely in the middle of Carpetright’s autumn peak trading period and therefore trim numbers to reflect this concern.”
Peel Hunt repeated a 'buy' rating on Carpetright shares but moderated its atrget price to 50p from 70p.
Carpetright shares were up more than 9% to 19.3p on Tuesday morning.