Carpetright has swung to a £70.5m annual loss driven by weak trading and the costs of a major restructuring of the business that includes the closure of 92 stores.
The troubled retailer said it had been “a very difficult year” for the firm as it reported a 3.6% fall in sales at its established UK stores in the year to 28 April.
Carpetright said trading in the first eight weeks of the current financial year had been heavily disrupted by its restructuring programme, particularly because some suppliers had withdrawn products. The hot weather had also kept customers away, the firm said.
The retailer announced its store closure plan in April, putting 300 jobs at risk. It has also asked landlords for rent reductions of up to 50% on 113 more stores under a company voluntary arrangement (CVA), a process designed to stave off administration as its struggles against a backdrop of weaker consumer spending and a slowdown in the housing market.
Announcing the loss, which followed a £900,000 pretax profit a year earlier, the Carpetright chief executive, Wilf Walsh, said the company was focused on working through its recovery plan.
“After a difficult trading year impacted by reduced consumer spend, increased competition and the legacy of an unsustainable, over-rented store portfolio – the CVA and recapitalisation offers us the chance to rebuild Carpetright, which remains the clear market leader in floor coverings with outstanding consumer brand awareness,” he said.
By the end of September, Carpetright expects to have closed 81 of the 92 stores earmarked for closure. Revenue over the year to 28 April fell by 3% to £443.8m.
David Madden, an analyst at CMC Markets, said that things had gone from bad to worse for Carpetright in 2018.
“Carpetright has had a difficult few months … in 2018, as the company had more than its fair share of profit warnings, which has taken its toll on the share price.
“The good news is that the CVA has given the company some much-needed breathing space.”
Shares in Carpetright fell by 2% after the results were announced.
