Two sales a week from profitability but nowhere near survival
If the 81 stores Carpetright plans to close in September generated an extra two sales a week, they would be profitable but would have to almost double sales to be part of the chain’s core stores.
The category C stores have average weekly sales of £11,500 and a rent to sales ratio of 28.9%. Carpetright’s average sale is £382, which grows to £1,387 on IFC, which accounts for 19% of sales.
In contrast its 176 category A stores have sales of £22,500 a week and a rent to sales ratio of 15.4%. The rents on these units are unaffected by the CVA.
The 31 B2 category stores which are ‘marginally profitable’ have sales of £12,200 a week and a rent to sales ratio of 20.7%. Under the CVA rents are being cut by half. The 82 B1 category stores have sales of £13,200 a week and a rent to sales ratio of 18.8%. These ‘make a small profit but insufficient to cover their supporting overhead,’ and will see rents cut by 30%.
The chain’s store refurbishment programme will see all the category A stores overhauled by 2021, while the category B branches may be refurbished after a ‘prudent look’.
The chain also said it had to be able to cater for shoppers who will never want to visit a branch. ‘[We must] ensure that we have the online capability allowing them to measure their home accurately, choose products, along with associated accessories with confidence and complete the end to end experience without needing to visit a retail outlet or talk to a human being,’ it said.