Yahoo Finance Carpetright to axe 300 jobs and close these 92 stores in rescue bid
Carpetright's boss Wilf Walsh has blamed a lack of consumer spending and too many large stores in bad locations for its decision to close 81 shops and tap investors for £60m.
Mr Walsh likened the group's trading problems to the strain in the casual dining sector. "It appears as if consumers have tightened their belts in terms of spending disposable income," he said. "In that way we're suffering like some of the restaurant chains."
Carpetright, which issued two profit warnings in as many months at the start of the year, said on Thursday that it would axe around 300 jobs as part of the latest wave of store closures.
Overall 92 sites of the flooring retailer have been earmarked for closure, although 11 have already stopped trading. Rent on another 113 is set to be slashed under company voluntary arrangement (CVA) proposals being put to landlords.
Carpetright has 416 shops in the UK and 136 in Europe, meaning that today's news affects almost half of its British stores. It said it hopes to relocate affected staff where possible.
Mr Walsh said: "The problem is we have a number of stores which were opened in the 1990s that are on not very good retail parks in poor locations." He added that where the company has invested in a new look for stores, overhauling the logo and layout, shops had been performing better.
Carpetright will seek approval from its creditors for the CVA on April 26, although landlords are not obliged to sign off on the deal. Mr Walsh said he was confident that he would have landlords' backing, saying that they had been "pleased with the approach [Carpetright] is taking".
The group - which employs nearly 2,700 staff overall - also confirmed an investor cash-call to raise around £60m through a rights issue to put it on a firmer footing. The money will be used to fund the group's strategy and reduce its debt, as well as cover the cost of the CVA.
The company still expects to report a loss for the year to the end of April, as trading conditions have remained difficult.
Carpetright shares tumbled 17pc in morning trade, to 35pc. The stock has fallen 80pc this year.
Meanwhile, the administrators for Toys R Us have confirmed that the brand's remaining 75 stores will close by April 24, with the loss of 2,054 jobs.
Simon Thomas, joint administrator and partner at Moorfields, said: "We are working closely with the 2,000 employees affected by the closures to ensure they receive the support they need for redundancy and other compensatory payments."
He added that discounts of up to 70pc were being made on the remaining stock.
Despite a number of high-profile casualties in the retail sector this year, Ed Cooke, chief executive of industry body Revo, said trouble at individual businesses needed to be put in perspective.
"A closer look at the retailers facing difficulties will clearly indicate that the recent headlines wrongfully lead many to believe the whole sector is faced with the same fate, when in fact most of those retailers have either failed to evolve or are struggling due to business specific factors," he said.
