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Carpetright plc (LSE:CPR) may have ended the 2011-2012 financial year with a reduced revenue, but Europe’s leading specialist floor coverings retailer still managed to boost year-end profit by more than 100%, thanks to the disposal of its property portfolio.
The group, which posted a sharp drop in underlying profit by over 76% to about $4 million in 2012, listed exceptional items of £9.5 million, to post a pre-tax profit of £13.5 million, or 104.5% higher than the previous year’s £6.6 million.
The exceptional items came from the sale and leaseback of freehold properties, including the disposal of its Belgian property holding company, Infradis, lifting the company up from the “difficult trading conditions” that saw a decline of the group’s total revenue by 3.1% to £471.5 million.
“In my statement last year, I said I expected the coming year would be challenging, with an extended period of economic uncertainty and fragile consumer confidence, and this proved to be the case,” Lord Harris of Peckham, Carpetright’s Chairman commented on the final results of the company, which issued several profit warnings in the past.
Profitable
Lord Harris insisted Carpetright remains a “profitable” business that “continue to generate strong operating cash flow” despite reduction in sale volume.
Free cash flow was reported at £44 million, compared to the £15 million Carpetright generated from the previous year, which helped reduce the debt from £65.7 million to £19.1 million.
Carpetright highlighted the sale and leaseback of nine freehold properties from which the company trades as the single biggest factor that enabled the company to reduce its debt.
“In common with many other businesses, we consider it appropriate to reduce our debt requirements in an uncertain economic environment with tighter credit conditions.”
Darren Shapland, who was appointed Chief Executive Officer in May 2012, still sees “on-going challenges of the difficult consumer environment” but nonetheless, encouraged by what “I have seen so far in the six weeks since becoming Chief Executive”.
Carpetright anticipates a “fragile consumer confidence” but said that the group is “well positioned to deliver future profitable sales growth once consumer demand improves”.
Share price was up 5.4% to £6.89 on the London Stock Exchange for the FTSE 350 company, trading on the main market at 10:30 AM GMT.
Company Spotlight
Carpetright plc sells a wide range of floor coverings, including carpets, rugs, and vinyls and associated accessories from about 490 stores across the United Kingdom, Ireland, the Netherlands, and Belgium.
