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By Alexander Bueso

Date: Thursday 25 Apr 2019

(Sharecast News) - 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)."

Laura Ashley shares slid on Thursday after the retailer warned that full-year results would be "significantly" below market expectations.

In a very brief update, the company said trading conditions have been "very demanding" over the third quarter.

"The board of the company have reviewed the revised full year forecasts for the year ending 30 June 2019 and expect the results to be significantly below market expectations," it said.

The group had already warned on profits back in February as it posted an interim pre-tax loss of £1.5m versus a profit of £4.3m in the first half of 2017 and said total retail sales declined 8.7% to £122.9m. The revenue drop was attributed to the closure of four stores during the period, a like-for-like retail sales decline of 4.2% and the termination of the master license agreement with its previous Japanese partner.

Laura Ashley said margins had been affected by a weakening of the pound against the dollar, as well as an increase in domestic costs.

Chairman Andrew Khoo said at the time: "Trading conditions have been difficult during the first six months of the year to 31 December 2018. Given the continued market turbulence and having reviewed the revised management forecast for the second half year, the board now holds the view that the performance for the entire year will fall short of market expectations."


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