Profits down but optimism high at United Carpets

PROFITS may be down at United Carpets but the UK’s third largest retail carpet specialist is hoping that its “value for money” strategy will provide a degree of insulation from the economic slowdown.

The Rotherham-based group, which now has 80 stores across the UK, reported today a 9.8% drop in pre-tax profits for the six months ended September 30 from £706,000 to £637,000.

Sales growth to the end of the period was more healthy with like-for-like sales up 5%. Network sales showed a similar rise from £29.16m in 2007 to £30.88m.

The company’s recently added beds division showed a 6% sales increase but United said that performance continued to be mixed with some outlets generating good sales growth while others continued to underperform.

However, in the first 11 weeks since the period end like-for-like flooring sales dropped 5% reflecting the sharp downturn in the economic climate since the end of September. Similarly bed sales slowed down sharply with a drop of 10.6%.

It said that although store numbers and revenues had increased significantly on last year, the tougher economic climate meant that it was taking longer for new stores to become established in the market.

Another 15 stores have been added to its network over the past year. The group started the year with 47 franchised stores and during the period added two new franchised stores in Melton Mowbray and Blackpool.

Five franchisee stores were converted back into corporate stores due to underperformance but have successfully been refranchised with an additional two corporate stores taking the new total to 51.

But the firm remains optimistic and has even seen a slight improvement in sales.

Peter Cowgill, United’s chairman, said: “Although United Carpets’ position as the value choice within the sector has to a degree helped protect it from the general slowdown on the high street, the management believe it is appropriate in this environment to adopt a cautious approach to protect our financial position going forward.

“During the second half of this financial year the group will continue to invest in marketing to support sales across the store network whilst at the same time looking to maintain tight control of all costs and reduce the current number of corporate stores by matching them with suitable franchisees.”

He continued: “We believe that United Carpets’ position at the value end of the sector, combined with its relatively resilient franchise structure, will enable us to continue to trade through this difficult period and be well positioned for the eventual recovery in consumer spending.”

 

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