RISKY BUSINESS
Major homeware brand with 274 locations embarks on cost cutting plans putting stores at risk of closure
It comes after a tricky time for DIY brands in recent years
A MAJOR home improvement brand could be looking at closing stores as it calls in advisors.
Carpetright is said to be "exploring cost-saving measures" for the business following a lack of demand.
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The British stalwart, founded in 1988, is understood to have appointed Teneo, the restructuring specialist, according to .
It is said to be looking at several options in a move that could lead to store closures, according to the report.
The chain currently has 274 stores across the UK according to its website, and is one of the country's biggest floor-covering retailers.
A lack of consumer spending in recent years and a rise in competition are thought to have caused problems for the brand.
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In the 14 months to January 2022, it reported revenues of £372.6million compared to £493.2million in the 18 months to October 2020.
According to Companies House, underlying losses before tax for the same period were £23.4million - down from £53million.
A spokesperson for Carpetright told The Sun it is "not in planning" for another company voluntary arrangement (CVA), which it last filed in 2018.
The move resulted in the closure of 92 sites.
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A CVA is a way for a business to restructure but continue to keep trading, but typically it closes some stores and negotiates rent costs down.
Which high street stores have closed in 2018? Shop closures in full from Mothercare and Maplin to Toys R Us and Carpetright
The spokesperson said: "We have a number of advisers looking at how we improve our performance, as we do in the normal course of business."
Carpetright opened its first shop in east London back in 1988 by the boss Philip Harris, who stepped down in 2014.
It was delisted from the London Stock Exchange in 2019 when it was bought by Meditor.
The hedge fund had bought almost 30% of the company’s shares and more than £40million of its debts the year before.
Carpetright had been forced to turn to the CVA in 2018 to shutter underperforming shops and reduce rents.
The Sun has reached out to Carpetright, while Teneo has declined to comment.
What else is happening to homeware chains?
The news today follows a tricky time for home improvement chains, both large and small.
It comes as shoppers have been cutting back on spending following the pandemic.
Plus the recent turmoil in the housing market has meant that homeowners aren't as focused on DIY projects as they once were.
Most recently, Kingfisher, which owns both B&Q and Screwfix, revealed annual profits slumped by more than a quarter.
The company reported a 25.1% drop in underlying pre-tax profits to £568million for the year to January 31, 2024.
Last year, the group had previously cautioned profits would slip after a 36% drop in pre-tax profits from £1billion to £611million in the 12 months to January 2023.
Rival Wickes, also reported a 31% fall in profits to £52million on flat revenues of £1.55billion for 2023.
Elsewhere, Homebase could be put up for sale after discussions were reportedly held with potential buyers, including big-name discounters.
It would be the second time the chain has been put up for sale in four years.
The DIY chain suffered a loss of £84.2million in 2023, compared with a profit of £30million the year before.
Windows and doors company Safestyle has collapsed into administration in October last year.
The company has a manufacturing site in Wombwell, near Barnsley and 42 sales branches and depots across the country.
Retailers closing stores in 2024
RETAILERS have been feeling the squeeze since the pandemic, while shoppers are cutting back on spending due to the soaring cost of living crisis.
High energy costs and a move to shopping online are also taking a toll, and many high street shops have struggled to keep going.
Here's a list of all the big-name brands closing stores this year:
- Argos - The brand announced plans to close 100 standalone UK branches last year as it looks to move away from the high street and focus on expanding its presence in supermarkets.
- B&Q - The chain has over 300 shops across the UK, so chances are you have one near you, but some stores have closed in recent months.
- Boots - The health and beauty chain announced that it would be closing 300 stores last July. Closures are ongoing and this will see the retailer's estate reduced from 2,200 to 1,900 shops.
- Clintons - Clintons mulled plans to close 38 shops in a bid to avoid insolvency late last year. We've listed the stores affected.
- Costa Coffee - The caffeine giant has around 2,000 sites nationwide, so chances are you'll have one near you. The chain has shut the doors to dozens of its sites recently. We've revealed which stores are due to close this year.
- Iceland - The supermarket has more than 900 stores but closed nearly two dozen sites in 2023, and more selected shops are due to shut.
- Lidl - The supermarket, which has 950 stores, is changing up shop locations, which has meant that some stores have to close. But the retailer is also looking to open 12 new supermarkets.
- M&S - M&S, which runs 405 stores across the country, has been closing a string of branches across the country in a blow for shoppers. It's not all bad news, though, because the chain also has big plans to open dozens of new shops as well.
- Trespass - The firm announced in July last year that it was closing six branches, but more are on the way.
- WHSmith - The retail giant, which runs over 1,100 stores, has shuttered eight stores since March 2023, but more are coming.
What's happening on the high street?
Retailers have been feeling the squeeze since the pandemic with shoppers cutting back on spending due to the soaring cost of living crisis.
High energy costs and a move to online shopping after the pandemic are also taking a toll and many high street shops have struggled to keep going.
The high street has seen a whole raft of closures over the past year and more are on the way.
Several major brands have collapsed in 2023, including Wilko and Paperchase.
The Carpetright news comes just days after fashion giant Ted Baker has fallen into administration, putting dozens of stores and hundreds of jobs at risk.
The Body Shop also collapsed earlier this year, before announcing it would shut half of its stores.
In early February, owner, Bridgepoint, was reported to be exploring "strategic options" for the business.
These options could include putting the retailer up for auction.
In January, struggling fashion brand Superdry said it was looking at various "cost-saving options" after reports it is considering a major restructuring which could include store closures and job cuts.
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It was working with advisers at PwC on a plan which could lead to a CVA or another form of restructuring.
Such a move could result in store closures and potentially force rent reductions with landlords.
Why are retailers closing stores?
RETAILERS have been feeling the squeeze since the pandemic, while shoppers are cutting back on spending due to the soaring cost of living crisis.
High energy costs and a move to shopping online after the pandemic are also taking a toll, and many high street shops have struggled to keep going.
The high street has seen a whole raft of closures over the past year, and more are coming.
The number of jobs lost in British retail dropped last year, but 120,000 people still lost their employment, figures have suggested.
Figures from the Centre for Retail Research revealed that 10,494 shops closed for the last time during 2023, and 119,405 jobs were lost in the sector.
It was fewer shops than had been lost for several years, and a reduction from 151,641 jobs lost in 2022.
The centre's director, Professor Joshua Bamfield, said the improvement is "less bad" than good.
Although there were some big-name losses from the high street, including Wilko, many large companies had already gone bust before 2022, the centre said, such as Topshop owner Arcadia, Jessops and Debenhams.
"The cost-of-living crisis, inflation and increases in interest rates have led many consumers to tighten their belts, reducing retail spend," Prof Bamfield said.
"Retailers themselves have suffered increasing energy and occupancy costs, staff shortages and falling demand that have made rebuilding profits after extensive store closures during the pandemic exceptionally difficult."
Alongside Wilko, which employed around 12,000 people when it collapsed, 2023's biggest failures included UK Flooring Direct, Planet Organic and Tile Giant.
The Centre for Retail Research said most stores were closed because companies were trying to reorganise and cut costs rather than the business failing.
However, experts have warned there will likely be more failures this year as consumers keep their belts tight and borrowing costs soar for businesses.
Last year, around 14% of insolvencies were in retail businesses, according to official figures.
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