Carpetright Share Discussion Threads

[simso] 09/2/2017 11:26

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?

[blondeamon] 06/2/2017 14:23

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.

[blondeamon] 06/2/2017 14:05

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.”"

[simso] 06/2/2017 11:31

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?

[tr65] 05/2/2017 19:45

Off a cliff? Just can't trust CPR, but good luck to anyone who finally makes a profit going long.

[larva] 05/2/2017 18:57

been buying these the last few days for quick 50% jump

[blondeamon] 05/2/2017 18:05

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.

[connor23] 02/2/2017 18:10

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!

[she-ra] 02/2/2017 17:06

connor23 - Its the personal debt of homeowners now that is ballooning. How do you think the world economy recovered? More debt.

Doesn't matter what form the debt is in its still a ticking time bomb.

[only who?] 02/2/2017 16:45

Looks like a breakout? Perfect time to short in CPRland.

[connor23] 02/2/2017 16:37

Relevance to now? Is subprime lending going on in the US???

[opodio] 02/2/2017 14:24

bowl to 500p

[she-ra] 02/2/2017 11:42

Did you not know what caused the 2008 market crash?

[connor23] 02/2/2017 11:38

Interest rates aren't exactly skyrocketing anytime soon though, even if the trajectory is up. And with implicit Govt support I think the housing mkt is safe unless unemployment were to rise or we were to go into recession. I know plenty of people like myself saving to get on the ladder. Plenty of first time buyer demand imo.

[she-ra] 02/2/2017 11:11

wigwammer - Most economists are in agreement that interest rates are going to be going up. Here and in the U.S. Credit will be tightened. Naturally a housing slump will follow. People wont me moving as much and therefore wont be buying carpets. People will be less well off and their personal debt will be their main focus of attention.

Then you have the competition from this new upstart run by Harris that will continue to expand and present problems for Carpetright.

[wigwammer] 02/2/2017 10:43

"Problem is with interest rates set to go up in the not too distant future and a potential housing market crash.."I've been listening to that argument for 10+ years..

[she-ra] 02/2/2017 10:39

Risen because of a tip.

Problem is with interest rates set to go up in the not too distant future and a potential housing market crash Carpetright is in quite a precarious situation.

[connor23] 02/2/2017 10:07

Chart looking a lot perkier now. Breaking out of the downtrend nicely.

[supasapi] 01/2/2017 16:12

hope your holding goes well Blondemon.... I got out a while back

[luckymouse] 31/1/2017 18:32

Could be a goer if it breaks out above there - t/u ok but for xmas home improvement manic period - not exactly rip your face off good - incremental improvements possible tho - hope it does well for you guys

Shauney lol

[wigwammer] 31/1/2017 12:33

At sub 0.3x sales there are evidently very low expectations for op margin and growth. If not now, when? Name a price.