Carpetright surges as Q4 sales trend improves 'significantly'

Shares in Carpetright surged on Thursday after the floorings retailer said the UK like-for-like sales trend improved "significantly" in the fourth quarter as its turnaround bears fruit.

In a brief update on trading in the 12 weeks to 20 April 2019, the company said its overall performance was in line with expectations, with the UK LFL sales trend in Q4 much improved compared to the year to date as customer confidence in the business started to return following its restructuring last year.

Carpetright said trading in the rest of Europe has continued to track ahead of the same period last year, driven by a strong performance in the Netherlands.

In addition, the group remains on target to achieve its previously-announced £19m of annualised cash savings.

Chief executive Wilf Walsh said: "This has been a transitional year for Carpetright and we remain on track both with our recovery plan and our strategic initiatives. The actions taken are driving improvement, particularly in the invested store estate, and the brand remains strong.

"Whilst consumer confidence remains challenged in the UK, the work we have done to reposition the business is starting to deliver the benefits necessary to put Carpetright back on the path to sustainable profitability."

Broker Peel Hunt said the update implies a significant improvement in LFL sales performance towards flat and a recovery in profitability sufficient to deliver a positive EBITDA for the full year, in line with its forecasts.

"There is still much to be done, but with the initial batch of store closures from the CVA completed and the group’s £19m cost saving target on track, Carpetright will enter the new financial year with a much more stable platform for recovery," it said.

"Critically, around half of the current estate has a lease expiry before 2020, with scope for Carpetright to bring back the store estate much further. We suspect the on-going estate is likely to settle below 300 over time (currently 355)."

At 0950 BST, the shares were up 29% to 19.70p.