Carpetright to close 81 stores, leading to hundreds of job losses

Carpetright to close 81 stores, leading to hundreds of job losses

Tuesday, June 26, 2018

Carpetright has reported major losses and plans to close 81 stores.

The retailer made an underlying loss before tax of £8.7 million for the year to 28 April, having made profit of £14.4 million the year before.

It’s statutory loss before tax was £70.5 million, compared to a profit of £900,000 in the prior year, which the firm said was driven by the cost of its store closure programme.

The underlying figures are usually taken to be a truer reflection of a company’s performance, while statutory figures take into account one-off losses or gains, such as the store closures.

The results come after the company pushed through a Company Voluntary Agreement (CVA), a restructuring procedure allowing it to shut 81 stores.

The closures will be completed by the end of September and will lead to hundreds of job losses.

Carpetright said trading was "heavily impacted" while it was putting together its CVA as some suppliers withdrew their supplies, leading to stock shortages.

Net debt jumped to £53 million from £9.8 million, which Carpetright said was due to suppliers tightening their credit terms in response to the distress in the business.

Wilf Walsh, Carpetright's chief executive, said: "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.

"This will be a transitional year for the group as we work through our recovery plan."

The retailer also secured £65 million of equity financing to fund the business while it carries out store closures.

Analysts say it could be profitable again by 2020.