Carpetright Sees Sales Improvement Despite Retail Gloom

Shares in UK flooring retailer Carpetright surged today after it said UK sales had improved in the fourth quarter.This comes a year after its creditors and investors backed a rescue plan which saw it close dozens of underperforming stores.Its losses had ballooned in the first half of its financial year, hit by weak demand and the fallout of its rescue.A series of British retailers have either gone out of business or announced plans to close shops, as they struggle against subdued consumer spending, rising labour costs, higher taxes and growing online competition.Carpetright raised £65m through an equity issue last June after creditors and shareholders in April backed a Company Voluntary Arrangement (CVA) restructuring to close stores and cut jobs.The company lost almost 90% of its share value in 2018.Last year Toys 'R' Us UK, electricals group Maplin and drinks wholesaler Conviviality plunged into administration.2019 has seen household names like Debenhams fall into the hands of lenders.Carpetright, which opened its first store in 1988, said UK like-for-like sales trend improved significantly in the fourth quarter, compared to the year to date, as customer confidence in the business started to return following its restructuring.Carpetright's performance was in contrast to upholstery retailer DFS Furniture and floor coverings distributor HeadlamL, who have blamed weak consumer confidence and flagged a softer trading backdrop in the UK.Trading in the rest of Europe continued to track ahead of the same period last year, driven by a strong performance in the Netherlands, Carpetright said. It also operates in Ireland and Belgium."Whilst consumer confidence remains challenged in the UK, the work we have done to reposition the business is starting to deliver the benefits necessary to put Carpetright back on the path to sustainable profitability," the company's chief executive Wilf Walsh said.Carpetright, which also sells mattresses, headboards, engineered wood flooring and vinyl tiles, it was on course to achieve a £19m annual cash savings target announced as part of its recapitalisation.Its shares were up over 25% today after rising almost 40% in early trade.Carpetright's gains today take the stock back to levels seen in February, when chief financial officer Neil Page announced his retirement after more than a decade in the role.