Carpetright Surges as Restructuring Begins to Yield Results

(Bloomberg) -- Carpetright Plc shares surged more than 10 percent as the troubled U.K. floor-coverings retailer showed signs that a restructuring earlier this year is starting to bear fruit.

While revenue in the first half fell more than 15 percent, the second quarter showed signs of life. Domestic comparable sales declined 8.9 percent, an improvement on a 16.8 percent decline in the previous three months, the company said Tuesday.

“We remain on schedule and are confident that this activity is already starting to yield benefits,” Chief Executive Officer Wilf Walsh said in a statement.

Carpetright underwent a so-called company voluntary arrangement earlier this year to restructure the business and identify dozens of stores for closure. Lease lengths have been reduced to an average of 3.5 years and more than half can be broken within two years, according to the release.

“Carpetright’s interim results show good progress in what is effectively a transitional year following the CVA implementation and restructuring program,” Peel Hunt analyst Jonathan Pritchard, who has a buy rating, wrote in a note.

The turnaround effort at Carpetright is complicated by uncertainty for British consumers stemming from the U.K.’s planned exit from the European Union, according to analysts at Shore Capital, which has a hold rating on the stock. The shares have fallen 89 percent in 2018.

To contact the reporter on this story: William Mathis in London at wmathis2@bloomberg.net

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, John J. Edwards III

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