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United Carpets: Robust Trading Since May Reopening

United Carpets Leeds FB.jpg

United Carpets Group plc (AIM: UCG) the third largest chain of specialist retail carpet and floor covering stores in the UK, is pleased to announce the following trading update. 

Since our 56 stores reopened on 22 May 2020 trading has been robust with good demand from consumers increasing like for like sales by 23.8% for the 19 weeks to 1 October 2020. This has meant the Group has recovered much of the ground lost during lockdown, when stores were closed for just over 8 weeks and virtually no revenue was generated. 

The Group continues to be in a strong financial position. At 30 September 2020, the Group had cash and cash equivalents amounting to approximately £5.4 million, of which £2.0 million relates to the Coronavirus Business Interruption Loan (CBIL), at nil cost for 12 months, recently secured to underpin the Group's finances and provide additional liquidity. The Group's cash position has also benefitted from the deferral of £1.1 million of payments, principally under the Government's VAT and PAYE/NI support measures. Accordingly, the Board believes that the Group has sufficient capital to support the business through the current challenges, and is well placed in the event of any further restrictions due to the ongoing Covid-19 crisis. It should be noted that a condition of the CBIL is that no dividends may be paid to shareholders whilst any of the loan remains outstanding. 

Paul Eyre, Chief Executive of United Carpets, said, "Since our stores were allowed to re-open, we have been encouraged by a strong period of trading. Customers appear to have been making up for the purchases they would have made during lockdown, with an increased focus on home improvements. Looking ahead, however, there are a number of significant, potential headwinds facing our sector and the UK economy in general: 

-    strong demand for home improvement products combined with disrupted production due to Covid-19, have led to raw material shortages and, consequently, increased input prices across our sector;

-    as activity historically increases in the run up to Christmas, availability of carpet fitting capacity may act as a constraint on achieving our full potential during that period;

-     further Government restrictions on movements may deter consumer demand;

-   a "no-deal" Brexit may result in additional import tariffs on flooring products (the majority of which are imported from the European Union) and may also result in adverse foreign exchange fluctuations; and

-    the longer-term impact from Covid-19 on unemployment and economic recovery may lead to a challenging retail environment in 2021. 

Nevertheless, we have a strong balance sheet, with appropriate financing, and the Board therefore believes that the Group is in a good position to navigate its way through the anticipated challenges."

Source : United Carpets

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26 October 2020

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