Freddie George Comments: Profits at Carpetright back on track

December 16, 2014. The Times

Carpetright’s new chief executive promised to broaden the appeal of Britain’s biggest floor-coverings retailer as he outlined the findings of a strategic plan aimed at revitalising its threadbare performance.

Shares in Carpetright surged more than 12 per cent at one point yesterday after Wilf Walsh pledged to target higher-value customers, open smaller stores and make better use of the internet for sales opportunities.

Mr Walsh, who joined Carpetright in July after two profit warnings and the departure of its founder, Lord Harris of Peckham, said that a three-month review of strategy and operations had shown that the retailer was a “fundamentally sound business”.

It needed “updating and repositioning” so that it could increase its customers and drive up potential profit margins, he said. “We stock all of the ranges, from £3.99 a square metre to £129.99. It’s all there, it’s just making people aware of it,” Mr Walsh said.

Mr Walsh said Carpetright’s new direction would involve chasing higher-spending customers, although he said the retailer would want to be seen as an expert in the “value” end of the market. “We are a broad church,” he said.

Carpetright, founded by Lord Harris 26 years ago, operates 460 stores in Britain, but has closed more than a dozen during the past six months to eliminate overlaps in towns. Mr Walsh said that Carpetright would prioritise opening smaller outlets. He was speaking as Carpetright reported a 252.6 per cent rise in pre-tax profits to £6.7 million for 26 weeks to October 25, on revenues up 2.6 per cent to £227.9 million.

Carpetright told shareholders to expect underlying pre-tax profits for the full year to be towards the top of forecasts, at £8 million to £11 million.

Freddie George, a Cantor Fitzgerald analyst, who has a “sell” recommendation on Carpetright shares, said: “We believe management needs to revitalise the brand.” The shares, which have tumbled from a peak of 628½p in April, added 45p to close at 358¼p.