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Carpetright Share Discussion Threads
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|Management attitude of conserving cash and refreshing stores’ format is the right strategy for the turnaround of its business. Also, I get the sense Carpetright wants to emulate WH Smith by focusing on margins improvement while stemming the decline in sales.
However, the share price of Carpetright PLC seemed less enthusiastic, despite the return to profits (making £14m per annum) and reduction of debt (£7m in borrowings from £105m, six years ago).
The interesting thing is the current market valuation of £140m is 85% below peak valuation of £1bn. And, profits are growing, due to the refreshment of their stores' format.
You can read more: http://bit.ly/2kQAYBP.|
|Looking at the long-term chart, Carpetright has been a whipping dog for the market with shares trending lower since the financial crisis (although they made a quick recovery in 2009/10, but quickly assume their downwards trend).
But recently, the company is turning its life around when it return to profit and the elimination of debt.
What do you guys think, am I missing something?
P.S. Well me doing an analysis for next few days.|
|Yes, last one. Sorry on the road and can't read on mobile, but ok makes sense. Wish I was granted those options :)|
|Hi blondeamon, if you are referring to the RNS just released, I think that is the lapsing of previous options which were miles under water, and the granting of some new ones which are very generous with a strike price of £1.30.|
|More director buys?|
|gleach and wigw: You're both spot on again. Anything I do would be a revenge trade.|
|You appear emotionally involved here tr65. Maybe time to take it off your monitor?
A short looks highly risky given recent price action imo|
|You're right, wigwammer. Having lost money on CPR in its magic carpet days, I see only gloom. Maybe 220p is time for a short?|
|C23 - perhaps sterling will strengthen - you certainly get lowly priced leverage here.|
|No apology necessary.You were gloomy at 160p and it worked wonders.|
|I think margins will be under pressure due to a weaker sterling. The flipside of course is the European business is getting a currency tailwind, so hopefully this compensates for that. Until we get some more detail in the results it's hard to know. Looks like a few more people are buying into the idea of this being a recovery stock, so hopefully a gradual rise from here.|
|Sorry to be the voice of doom, but my feeling is that a chart with a Vee-shaped bottom is rare, so even if CPR is recovering the price will probably hit the 160/170 area again.|
|THanks for posting that blondeamon, and also for your helpful answer to my earlier post. It is an interesting time for the business now, with the modernisations brought forward and having a positive impact. If the last quarter's sales are a "trend" rather than a one off, then that momentum will carry through to the new year and much softer comparatives. The January +6% on top of +6.8% last year was a great performance which I had not expected, and I think thsts the really interesting question now...whether than level of performance carries on. I believe the product is mostly sourced in Europe....so does that mean that the margins could remain under pressure?|
|Simso to answer your question: no one can know for sure with retail. It's very seasonal business.
My research points out that the refitted stores are doing a great job increasing sales and those only just came online in the last 2 quarters. So that could be one big factor and it's just starting up. A newly refitted store slows down at first while work is in progress and then once finished it gets a nice boost.
Brexit and postponing big tickets items for after Christmas could be another.
EU also now contributing massively, 20% of profits and goes better every quarter.
By following the different channels CPR uses online, I see a massive improvement in customer feedback. Sentiment is massively improved and people like spending money there now. Perhaps this has developed in a word-of-mouth boost for the stores, where happy customers tell their friends.
Last but not least, the Interest Free Credit offer just became available online as well. So people can now buy everything online in installments without ever going back to the store. In the old days you had to go once to see, think it through and then go back to buy. Now you just go there once and then buy online from the comfort of your sofa and all with Interest free payments.
Nothing complicated really, the board has taken multiple steps to turn around the business and they are all contributing. Store closures, redesign of stores, marketing boost, IFC offerings, deal of the week, better customer service.
It won't happen overnight and we might still get a few bad quarters but I think this is now going back to where it was a few years ago: being the absolute market leader in the UK with the equivalent profits to show for it.|
|Carpet the New Smartphone as Retailer Leads U.K. Stock Gains
"Forget biotech, smartphone apps and oil exploration -- this year’s top-performing U.K. stock hails from an altogether less glamorous background: the humble world of carpet retailing.
Carpetright Plc shares are up 46 percent in 2017 to date, putting them just above Kaz Minerals Plc and Gulf Marine Services Plc at the top of the FTSE All-Share Index rankings. Fellow retailers Next Plc and Pets at Home Plc are among the biggest laggards.
So why has a drab floor-coverings seller gained more than a Kazakh copper miner that’s benefiting from a surge in metal prices? For a start, Carpetright shares had a long way to rebound: the stock fell about 90 percent in a decade as the retailer’s model of selling cheap carpet from big-box stores became outdated. To change that, Chief Executive Officer Wilf Walsh is opening smaller stores and revamping the product range, and the Jan. 31 announcement of a return to domestic sales growth showed some positive early signs.
“The strategy being adopted by management can materially improve the performance of the business and help deliver stronger shareholder returns,” George Mensah, an analyst at Shore Capital, said in a note.
That strategy also involves a program of store refurbishments and measures to improve customer service after Carpetright acknowledged last year that its reputation and trust hadn’t ranked highly with consumers “for an extended period.” Lucy Alexander, the star of a BBC television show about home renovation, was brought in as a “brand ambassador.”"
|Hi blondeamon, you are right to point out that the +6.8% sales rise in January was a spectacular result, on top of +6% in January a year earlier. The issue taxing me, though, is where it so suddenly came from!
Given that January is a big month, one assumes Nov and Dec in total must have been flat/down in order for the 3rd quarter to be up +1.9% in total. We know that Q1 and Q2 were down, so this January performance was a significant change from where they had been travelling.
The real question is whether this sudden change in January performance is a "one off", or is it part of a sustainable change in performance? It is true to say that CPR advertised very heavily in Jan on TV...more so than usual I think. That advertising may be worthwhile in a large month like Jan, but could Feb and March revert to very difficult again without that Spend?|
|Off a cliff? Just can't trust CPR, but good luck to anyone who finally makes a profit going long.|
|been buying these the last few days for quick 50% jump|
|All the store closures from the previous years that require 2 years for cash break even are slowly coming into play in this financial year and onwards as they started in 2015. There are even a few store openings like Gerrards Cross and Bath as well as some in EU.
Now all these refitted stores are showing promising growth and their effect is cumulative. The ones done in H1 didn't have time to perform as much and with 120 already done then the results will start to show really soon in H2 this year.
Our most important month, January, was up 6.8% against a superb 6% last year. Overall for the 3/4 of the year we're down a bit compared to last year but IMO it looks like Q4 will be another good one and we'll be on the upper end of expectations.
EU is now our biggest growth story. On H1 20% of the profits came from there and I suspect that number will be bigger for the year end. Netherlands has been going really well and the brand is becoming very popular.
They need to make sure they don't create unnecessary debt and reinstate the dividend within the 2017/2018 financial year once the refittings are done. Then this can slowly go up to 400p again.
Tapi cannot compete with CPR as easily anymore. Free deliveries for beds, Interest Free Credit both Online now and in Store as well as customer service improving massively over the last 2 years.
Spring is coming soon and those artificial grass offers will sell like crazy, like last year.
IMO company going great following its strategy and execution is on track. I'd dare say that it actually goes a lot better with redesigning their image than everybody thought.|
|Well it takes two to make a market. I'm not overly concerned about the macro side of things in the short to medium term. The bigger risk for me is competition and management execution of their strategy. Signs are good at the moment, but still early days. Lots of operational leverage here so any decent uptick in sales could see profits start to motor. Of course the counter applies also!|