Much to everyone's surprise, Carpetright said today that like-for-like sales actually rose in the first quarter of its financial year, for the first time in over a year. After reporting a calamitous 15.3% decline in the previous quarter, Carpetright seemed to be really struggling - yet another victim of the housing market slump. But this shock jump in sales shows that boss Lord Harris got it exactly right when he decided to start selling Sleepright beds in store - and now Allied Carpets has gone bust, he should be on a roll in carpets too.
It's been a rotten year for Carpetright - with fewer people moving house, fewer people have been buying carpets, and its sales have plummeted. 15.3% was a horrendous drop, and since the first quarter is usually its quietest, nobody was expecting a recovery this time round. However, Carpetright said today that UK sales were up 6%, or 1.4% on a like-for-like basis. At the back end of 2008, Lord Harris decided to take up the option to buy Sleepright, and brought the beds into his stores in place of laminate flooring and rugs (which nobody was buying). There's a widespread theory that recessions are a time to focus on what you do best, which in this case was floor coverings - but fortunately for Carpetright, Lord Harris ignored it.
The other big bonus for Carpetright has been last month's collapse of Allied Carpets. This should mean Carpetright can hoover up a big chunk of extra sales (not to mention some cheap stock and/or property) - although it's not actually seen much benefit yet because the old Allied stores are flogging what's left of their stock at knock-down prices. But it has already enjoyed a major boost to its carpet insurance division - last year this made £18m, but thanks to referrals from Allied, it's on track to make between £40m and £50m this year. Nice.
So the future looks bright for Carpetright (hence why its share price jumped 12% after today's news). Having strengthened its offering during the bad times, it can now look forward to a recovery (both in the housing market and in the economy more broadly) with its biggest competitor out of the way. This time last year Lord Harris warned that he was facing one of the most difficult years in his entire career. The next one should be a lot better.
In today's bulletin:
Bank of England shocks by pumping in an extra £50bn
ITV slumps again - and takes £145m hit on Friends Reunited
Unilever's brands are back - but not P&G's
Carpetright turns it around as bed gamble pays off
Decisions: Marcia Kilgore of Soap & Glory and FitFlop