A day after Toys R Us and electronics retailer Maplin went down, Carpetright has put out an announcement indicating that it’s finances are looking distinctly threadbare.
Sales in the UK remain below bosses’ expectations and the group expects a loss for the year ending April 28. The retailer is also having to talk to its banks “to ensure it continues to comply with the terms of its prevailing bank facilities”. In other words, it needs the covenants loosening.
They’re on board for now, but in a difficult position. There comes a time when you just have to cut the cord and take both the financial hit and the flak.
Carpetright isn’t at that point yet. It had 600 stores in 2010, but just 400 now. Some of them make money. But as with many retailers right now, too many don’t. There is a long tail of under performers that need sorting out.
That’s going to make for some very difficult conversations with landlords where the leases are long term and too expensive for a high street turned chilly that summer won’t warm up.
Like the banks, they too are going to find themselves on the horns of a dilemma.
Carpetright’s recovery race will be hard one, and the fences it faces tough to clear. It’s no wonder investors were pushing through sell orders in response to the news.
CEO Wilf Walsh, a former boss of bookmaker Coral who knows his onions, will be crossing his fingers that the important Easter trading period gives him some breathing space.
Trouble is, Britons’ incomes continue to undershoot inflation, their willingness to splash out on big ticket items like new carpets, flooring and beds isn’t high, even with six month interest free credit offers, summer sales and free home consultations and deliveries.
Westminster is being ridden by crazy Brextremist jockeys who are perfectly prepared to wreck an agreement that has kept Britain and Ireland peaceful for nearly two decades after years of bloody carnage. The ongoing travails of the consumer, the UK economy, the companies operating within it, are bad, the damage the Brexiteers are causing is shameful. But it really pales by comparison.
Small wonder that people are hiding under rocks and keeping their money under their beds. The going reports Mr Walsh must be getting read “heavy” or even “bottomless”.
Even were there no Brexit stupidity, there’s still the small matter of changing consumer tastes and the internet.
So it will be a considerable achievement if Mr Walsh, who’s forced through a number of changes, can stay the course.
He’ll deserve more than a smattering of applause if he ends up in the winner’s enclosure, because the four mile retail steeplechase track is already littered with fallers and there will be more to come.