Carpetright details digital plans to support smaller store estate

Carpetright CEO, Wilf Walsh, said today (25 June) the floor coverings retailer has made “substantive progress” in the areas that drove the business to undertake a company voluntary arrangement (CVA) and re-capitalisation in 2018.

In a full-year results announcement for the 52 weeks to 27 April 2019, Walsh detailed the strategic progress made in resizing the retailer’s estate and simplifying its operations, which has seen its UK store numbers fall from 410 to 334 over the last year.

Walsh reiterated the key reason for CVA was “an unsustainable lease profile and a legacy property portfolio, which, despite our best efforts, proved too difficult to address without resorting to drastic action”. He said Carpetright remains on track to deliver £19 million of annualised savings as a result of the downsizing.

In addition to 76 stores closing as part of the CVA, 23 stores have been retained on a nil rent basis as landlords did not want these properties to sit empty. Average UK store lease length has been reduced to four years, and the business said it has further flexibility to optimise its store estate size and/or relocate shops before April 2021.

With group revenue down by 13.4% to £386.4 million and the company reporting a statutory loss before tax of £24.8 million over the course of the year, attention has turned to how the retailer can grow sales and add customers as a more nimble operation.

Buying carpets remains a heavily store-based retail process, but Walsh and his team recognise its physical estate requires more digital support.

Among the tech-related strategies in place are “several exciting initiatives to grow remote sales”, led by group commercial director Jeremy Maxwell. Last year, Carpetright reportedly doubled its conversion rate online, and Maxwell’s team will focus on developing “innovative digital content and tools to enhance the user experience”.

The company is developing a new CRM capability to support its rationalised store estate, while Microsoft Dynamics 365 is currently being implemented to replace a legacy ERP system.

Walsh said: "From a trading standpoint it was, as expected, a year of two halves, with the first six months reflecting the impact of the CVA implementation, followed by a significant improvement in the second half and, in particular, during Q4. 

“We are pleased to report today that this positive trend has continued into the new year with a return to like-for-like sales growth in the first eight weeks of the period, when UK LFL sales grew by 8.5%.”

He also said that 241 stores now trade under the new brand format, with the objective for every store to have "some form of consistent new branding" and additional investment by the end of the CVA period in April 2021.