Carpetright Share Discussion Threads

[simso] 20/4/2017 11:16

THanks blondeamon, it is also good to hear a more optimistic view! A note from N+1 Singer this morning strikes a similarly bullish tone ahead on next Tuesday. A fair point by meijman too, as we will soon be at the anniversary of sterling collapse after Brexit vote, and sterling may actually be higher than LY once we pass the end of June, which will help the margin.

[meijiman] 20/4/2017 10:50

This company should benefit from stronger sterling I think.

[simso] 20/4/2017 09:42

I apologise that I am the bear of this BB! I still think that a current rating of 15* Earnings for the year to April 17 is a rich rating, given all the ongoing pressures for UK Retail. I think that sudden and exceptionally strong January performance would need to have continued through the final quarter in order to give the share price another leg up, as I think it would put them at the top end of the wide range of Brokers Forecasts. I am more fearful that the +6% LFL in January was so sudden, and out of context with the rest of the year, that it could have been more of a blip. Margin pressure from currency, and an undoubtedly weak trading environment in the last three months, all make me more concerned

[blondeamon] 20/4/2017 08:52

Could we be looking at 300p this time next week?

Uk elections euphoria certainly won't hurt, lots of people are happy with the snap election. Well needed if you ask me.

[toffeeman] 19/4/2017 12:46

More like virgin on the ridiculous :)

[blondeamon] 19/4/2017 12:01

This cherry is about to pop.

[bookbroker] 12/4/2017 15:54

The difference here is that is the market leader, the competition is pretty intense, but this has come a long way down, people will still buy a carpet out of need, rather than a TV which is simply another upgrade, it amazes me that people keep buying electrical, TV's are simply a waste of money, but then I suppose you have to justify that £50 per month Sky sub. When people think carpet, there is a good chance they think CPR! This is a business still in transition, I think you are being far too reliant Simao on the UK, the European side has been doing pretty well!

[simso] 12/4/2017 15:23

CPR should be updating us at the end of April, and we will hear how the trading period Feb - April has performed. The final year profit result will be incredibly sensitive to that LFL for the final quarter. Other than the spectacular January performance, the year had been running around -2% to -3%. If that has resumed again, we are almost certainly in for a Profit Warning. If the January Performance of +6% was actually the start of a new dawn, and has since continued in that vein, then I am sure we will be at the top end of expectations. My concern is that all the Retail Data suggests that non food has been extremely tough this year so far, and that footfall to Out of Town Centres (where CPR predominate) is down on the year by more than the traditional High Street.

[toffeeman] 12/4/2017 12:42

Do you honestly believe that customers differentiate independent fitters from Carpetsh1te?

They have had an average of 4 reviews per day on TP over 3 years - compare that to someone like SCS (which is also pants).

:)

[blondeamon] 12/4/2017 10:00

Trustpilot flooding with positive reviews past week again, a few negative ones 99% have to do with the fitters and not with CPR (fitters are externals)

Last year Easter was in March so comparables will need to consider this for 2017. If we still do better than last year even without Easter yet then we're really on to a great turnaround.

Looks like it's going to be a very good month in April too.

Not long now to find out.

[blondeamon] 02/4/2017 12:03

Quarter is over and IMO it will have been a pretty good one.

Europe will have done splendidly as economic sentiment there remained in decade-highs and we even opened 1-2 more stores there recently while closed some expensive ones.

In the UK 30% of the stores will now have been refitted with a proven rise in l-f-l for each one that has. All those done in quarters 1-3 are benefiting this quarter. Plus 3 more stores opened in very promising locations.

I noticed that the 50% offers are becoming less frequent while volume goes up. It is my suspicion that margins must be better than originally anticipated during half year results(2.6% for UK and 3.1% for EU). Last year's Q3 update mentioned margin downgrades, most updates did. It was omitted this time so I take it as the margins did not change or maybe got better.

I also expect some net debt from the refittings, no more than 1m or less.

Finally, for next year they should bring back the dividend. A small token amount should be ok if they have refitted at least 50% of the estate. It will be a huge signal to the funds to return and the share price to significantly rise from here. Those who are in early will reap the biggest rewards.

[1fox1] 28/3/2017 17:11

I could do with some artificial grass for my head.....

[blondeamon] 28/3/2017 14:27

Quite a busy weekend it seems based on trustpilot. Also sale until today, let's get some last minute volume to pump those numbers up :)

Artificial grass offerings look even better than last year.

[blondeamon] 23/3/2017 10:43

Simso, prices are already up by at least 5% since Brexit. If you follow the website you can notice it yourself.

Also, they stopped doing discounts of more than 50% so margins improved from that. 2 years back you could see 70 and 80% discounts on many items. Not anymore.

Of course there is a hit but I believe we've seen most of it already in H1 where the results were not very good and the business was adjusting.

[bookbroker] 23/3/2017 10:41

A possible return to dividends this year may also improve sentiment in the co.

[bookbroker] 23/3/2017 10:39

Sim., what I saw from my conversation was that the staff are actually buying in to the notion of recovery by being happy to see part of their remuneration buying stock through incentive schemes, and actually being proactive in the business as much for themselves as CPR!

[simso] 23/3/2017 10:30

bookbroker and eamon, thanks for your interesting thoughts.

i agree "its only one store" bookbroker, and in reality its not even that…in the sense it is a salesman telling us they are happy with performance, when in reality they are hardly likely to say anything else! The industry figures about Retail Park footfall are relevant, though, and show Feb was the biggest decline since 2013. CPR are on a lot of Retail Parks, and I can't see them being immune from this drop in figs. I suspect Easter will be an important comment of this final quarters trade.
eamon - in terms of margins, you say CPR have passed on cost increases to date to the customer, but in fact margins are flagged as down 1.25%-1.5% points, which is a big hit on £450m turnover …perhaps £6m in its own right. I think the pricing (e.g. 5.99 per sqm etc) make it hard to increase prices, as you can't make that price £6.14 a sqm. If CPR are hedged until April 17, then we have not yet seen the currency hit, so thats a concern for next year.

[blondeamon] 23/3/2017 09:54

It's also positive that new stores open again. I think we're up to 5 new ones this year and 1-2 in Europe as well. Growth is still possible if we move to the right locations with favourable leases and exit the really unprofitable ones.

Europe this year will bring in a lot of money. Raw materials have risen but they were hedged until April 2017 and we already passed the cost on to the consumer so there are no surprises waiting for us after April. Also, the company has turned to UK made carpets more and more which should help a bit.

Netherlands is particularly strong this year and driving the sales there. With the elections giving a good result for economy the consumer confidence is highest in last 9 years and people are spending.

UK should also see a bounce in the £ soon after Article 50 is delivered and uncertainty starts to go away.

I think April will make for a very strong update, especially as last year's was not very impressive anyway so comparables are not so bad.

[bookbroker] 23/3/2017 09:16

It is only one Sim. in the original format, what we know is that margins are pretty skinny, but the co. is working hard to improve its image, and it does seem to be having a positive effect, it is difficult to know how performance is overall, we also have seen the significant re-rating of the co., hence the share price rebalancing, their website is much improved in terms of interaction. One of the biggest problems for this co. has been the onerous leases, they are still in a sort of roll-off from them, and where possible re-negotiating much shorter terms, so the business can be quicker to react where unprofitable locations are taken out of the estate, time will tell, difficult to predict!

[simso] 23/3/2017 08:59

Thanks book broker, thats helpful feedback. Given the normal Operational Gearing of Retailers…and with CPR on a particularly narrow Profit to Sales ratio, it is sensitive to that final quarter (Feb-April) sales LFL number. I think anything better than +3% LFL in the final quarter will be an "Ahead of expectations" profit number…and confirming the encouraging numbers we saw in January. However, anything around 0% LFL or less for that final quarter and I fear a profit warning! If anyone hears any anecdotal information about stores they visit, it is invaluable background given that sensitivity.

[bookbroker] 23/3/2017 08:25

Maybe, difficult to compare, a small part of SCS business is flooring, they are mainly furniture, sofas, etc., CPR generally still carpets and flooring with beds, I spoke to sales guys at one store early March and they were quite happy with sales volumes. This is not necessarily reassuring as they have 500 stores, but the co. is revamping its business and much is in transition, this was one of the older stores I saw, but we are working of a low base, with little or no debt, but they have a strong position despite big competition in the south. Nonetheless I think there some grounds for optimism, there is lots of work going on behind the scenes to improve performance, and I think European side doing pretty much ok, iniatives I hope will see this company continue to progress.

[simso] 23/3/2017 08:15

The ScS results this week highlighted a big slow down in trade for February, and it looked like -6% lfl for the month, having previously been flying. March was more encouraging so far, though, they said. They blamed Retail Park Footfall. I wonder if a similar trend at Carpetright?

[blondeamon] 23/3/2017 07:35

Another example of the transformation here