Highlights
UK
• Self-help initiatives continued to show growth against a backdrop of volatile trading conditions.
• Like-for-like revenues decreased by 0.8%. Excluding the expected contraction in sales from the wholesale business, like-for-like sales in the core UK retail business were flat year-on-year.
• Gross profit percentage increased by 140 basis points to 63.1% (H1 FY13: 61.7%).
• The number of stores reduced by a net four during the period to 474 stores, trading from 4.1m sqft, being 2.3% lower year-on-year.
• Modernised a further 38 stores, making a total of 224 stores now completed.
Rest of Europe
• Revenue in local currency declined by 8.4% with like-for-like sales down by 8.6%.
• Continued difficult trading conditions in the Netherlands, where the floor coverings market remains weak. Focus remains on our self-help measures to improve the performance in the second half.
• Belgium and Republic of Ireland performing as expected.
• The number of stores remains unchanged at 142, trading from 1.6m sqft.
Commenting on the results, Lord Harris, Executive Chairman, said:
"Against a backdrop of volatile trading conditions, our first half performance reflects an improvement in profits in the UK, driven by the continued success of our self-help initiatives, offset by a move into loss in our Rest of Europe business, primarily from a continuation of very difficult trading conditions in the Netherlands.
"Historically, the trend in UK mortgage approvals has been a useful lead indicator of consumer demand in our sector, bearing a positive correlation with floor covering sales. Approvals began to show encouraging signs of improvement during the first half, although this is from a very low base by historic standards. In the past, we have seen a lag of around six months before the impact of a change in the mortgage approval trend has been reflected in our sales.
"The success of our self-help activities in improving Group performance during the period continues to be encouraging, demonstrating that a focus on factors within our control can yield good results. While we anticipate trading conditions will remain challenging, we expect these self-help initiatives will underpin an improvement in Group performance in the second half and our expectations for the year as a whole remain unchanged."
