Search Share Prices
Carpetright staves off administration, expects 2018 loss of up to £9m
Beleaguered retailer Carpetright staved off administration on Monday after the majority of its shareholders approved its proposed company voluntary arrangement, but the company warned that trading conditions remain "difficult" and it expects to report a full-year loss of up to £9m.
The group had already announced last week that the CVA was approved by a majority of more than 75% of its creditors.
The implementation of the CVA will be conditional upon interim funding of up to £15m, on which it expects to update the market shortly, and the outcome of a capital raising, which is scheduled to take place on or around 18 May.
Chief executive officer Wilf Walsh said: "The CVA proposal will enable us to take the tough but necessary actions needed to restore our profitability. Having now received approval from both shareholders and creditors we will press ahead with our plans for the proposed equity financing to recapitalise the business and enable Carpetright to address the competitive threat from a position of strength."
Carpetright also said that trading conditions have remained difficult in its UK and Rest of Europe businesses, as expected.
In the UK, like-for-like sales fell 10.5% in the final quarter of the company's financial year, amid continued weakness in consumer confidence and due to "inevitable disruption" from the publicity associated with Carpetright's ongoing restructuring activities. As a result, full-year LFL sales will be down 3.6%.
However, the company said its refurbished stores continue to outperform the uninvested estate, giving it confidence to continue with the store modernisation strategy following the upcoming capital fundraising.
Like-for-like sales in RoE fell 8.3% in the final quarter against a similar trading background to that experienced in the UK, with the full year figure being an increase of 1.1%.
Carpetright expects to report an underlying pre-tax loss for the year to 28 April 2018 of around £7m to £9m.
At 1100 BST, the shares were down 5.5% to 40.30p.