Walsh warns on falling UK sales and missed beds opportunity
Carpetright’s ‘year to put behind us’ which lead to its CVA began with a Boxing Day sale that ‘started and never really got going,’ according to Wilf Walsh, Carpetright ceo.
‘With significantly increased competition and signs of a slowdown in consumer spending this left us exposed, particularly given our historically oversized and over-rented estate,’ Walsh told shareholders as he revealed a pre-tax loss of £70.5m for the year to 28 April.
He also warned that UK sales are still falling. ‘As expected, trading in the first eight weeks of the new financial year was heavily impacted by the disruption arising from the group’s restructuring activity, in particular stock shortages as some suppliers had withdrawn supply, and the period of exceptionally warm weather. In more recent weeks, following the approval of the CVA and completion of the recapitalisation, the group has begun to see the benefits of stock replenishment by suppliers and less negative publicity, although UK like-for-like sales remained negative.’
Walsh also admitted that its opportunity to become a major bed retailer has likely gone. ‘The beds category was introduced in 2009 primarily as a means to utilise excess store space. While last year we believed that we had a significant opportunity to grow the beds category with a complete re-ranging and product change – it simply did not materialise and it has been a poor trading year. We are not top of mind for customers when it comes to bed retailing and it is now clear that a brand extension of any significance is going to be difficult to achieve.’
He said there was ‘some scope’ for the Sleepright brand but only where stores were large enough to stock a significant range. ‘We are happy to concentrate on the established beds brands that people know versus other retailers that are vertically integrated with their own brands, as well as competing aggressively on price as a cash-generation opportunity. We will launch the Essential Value proposition in beds, as well as strengthening our sub £500 offer.’
IFC now accounts for 19% of sales: the average transaction value with IFC is £1,387 but without it it is £382.
Some 76% of customers are highly satisfied, and 20% satisfied but this falls to 71% for its home flooring surveyors and just 65% for its third party fitters. Walsh said the chain should be getting higher ratings, particularly for fitters.