A quote from today's trading statement
"As I have said before, the UK trading environment is more difficult than at any time in my working life, with a constant news flow of financial turmoil and redundancies. Until we are able to see some confidence in the economy return, trading will continue to be challenging. Sales in January are an improvement on the trends seen in November and December. Our gross margin remains level with last year, in line with our expectations (Lord Harris of Peckham, Chairman and Chief Executive).
http://www.stockopedia.co.uk/news/announcement/CPR/090203cpr6685m.htm
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Carpetright plc is a specialist floor covering retailer, selling a range of carpets, rugs, vinyls and laminates together with associated accessories. The Company has also extended its product offering to include beds. It trades from 632 stores organized and is managed in two geographical segments, the United Kingdom and the Rest of Europe (consisting of the Netherlands, Belgium and the Republic of Ireland). The Company’s segments derive their revenue primarily from the retail of floor coverings and beds. Brands in the United Kingdom and Ireland include Carpetright and Sleepright. Carpetright is a carpet-retailing brand in the United Kingdom and Republic of Ireland with over 500 stores. In addition, it has over 100 stores in Holland and Belgium making it Europe’s specialist carpet and floor-coverings retailer. Its subsidiary, Storey Carpets Ltd (Storeys), is an independent carpet retailer in Britain. more »
11 Posts on this Thread show/hide all
The slow in the decline in sales in January was seen as good news - that's saying something!
http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/4446870/Carpetright-shares-up-on-January-sales-boost.html
Latest Interim Management Statement out today, showing that like-for-like sales have been rising in the UK and Ireland, even if European operations continue to struggle:
http://www.investegate.co.uk/Article.aspx?id=200908050700048844W
Those who watch the ADVFN thread on Carpetright and have heard the "its a nailed-on short" argument being advanced on other boards.....(at 400p.......500p.....600p etc etc ....which was a view I always took issue with since I first saw it being suggested in February this year) will be interested to see that the shares are up 82p this morning to 746p as I write......
....so if you are wondering that that smell is that is putting you off your breakfast, it is the short-sellers being toasted!
Having said that, there does come a point where it becomes a relatively sensible short once again - but that might not be until £9 or so ....and even then it is far from guaranteed!!
ee
You make a very good point ee about shorting stuff like this. I hardly ever short of fundemental grounds - actually I almost never short. The reason is simple. If the stock has run up so much that fundementals seem wrong then there is actually not much reason why it won't continue. I mean what is the difference between a p/e of 15 and 20 when it is 15 already!
So the shorters come in and then some bit of half decent news comes in and they get squeezed out which is exactly what is happening here.
The only time I consider shorts is when some kind of news comes out that signals that the stock will always be swimming up hill forever more e.g. its got loads of debt no way to refinance it and negative growth. Normally though these stocks will look cheap on fundementals.
I'm not sure if any research has been done but I expect shorting high (historical) p/e shares leads to looses more often that shorting lower p/e shares perversely.
Log
loglorry:
A Ben Graham quote:
"Buying a neglected and therefore undervalued issue for profit, generally proves to be a protracted and patience-trying experience. And Selling (short) a too popular and therefore undervalued issue is apt to be a test not only of one's courage and stamina, but also of the depth of one's pocketbooks."
Hi ee,
Would you care to elaborate on why you feel 900p specifically would be a good level to short from, whereas today's close of 768.5p isn't?
I also note that there is no mention of margins or profits in today's statement and, having participtaed in the analyst conference call, there wasn't any suggestion of good news on that front. I'd also be most interested in CPR's debt/cash position (though, of course, the current SP offers a great level to launch a rights issue from, to repair their balance sheet).
Lord Harris did confirm a close link between UK mortgage approvals and sales, offering the rule-of-thumb that 1,000 extra mortgage approvals/month = +0.25% on sales.
I currently don't have a position but am interested in re-entering (short) if the circumstances seem right (short-term, it looks like analyst upgrades are on their way - so I'll be waiting for those to work their way through first).
Regards,
Mark
In reply to marben100 (post #5)
No reason. I don't short, as you know. Nor do I use charts. I suspect the share price will move beyond what most people think rational, thanks to continued short closing and the analysts trying to look through the short term. The £9 area just feels as if it might be the right sort of number.
Most people now appear to think that the green shoots are just around the corner. Whilst that's the case, stocks like CPR will be better bid. I think its a guessing game when that view will change - and what will change it.
cheers
ee
In reply to emptyend (post #6)
Many of us think that on an historic P/E of 44, a current year forecast P/E of 30 and a 2011 one of 20, it's already well beyond what most people would consider rational - against retailers like HFD & MKS trading on current year P/Es below 15.. ;0)
Well evidently that is the case - hence shorters have been trying their luck and losing money all the way up!
Out of interest, what were CPR's earnings per share in 2006/2007 (the last active period for house moves) when the shares were £12-13? Answer 65-68p....so currently the shares trade on around 10-12x 2006 earnings. Doesn't seem THAT unreasonable, given that interest rates have collapsed and, thanks to Allied Carpets and other retailers falling by the wayside, a lack of competition must surely facilitate a widening of margins in the future. And how long does the average carpet last these days??? Where else will one buy replacements from?
rgds
ee
How bad can it get before the market prices this correctly??
http://fool.uk-wire.com/Article.aspx?id=201106280700122182J
Total Group Revenue1 decreased by 5.8% to £486.8m (2010: £516.6m)
· Underlying 2 profit before tax down 40.1% to £16.9m (2010: £28.2m)
· Profit before tax of £6.6m (2010: £22.3m)
· Underlying earnings per share of 18.0p (2010: 31.6p)
· Basic earnings per share 6.8p (2010: 23.5p)
. dividend cancelled
"Looking forward, I see no respite from the challenging environment over the next year"
trailing p/e on basic eps is now nearly 100. And yet the price is only off 4% so far today, its even rallied from its lows. True it's still on 10x 2006 earnings of 65p, but I think those earnings are a very very long way from being repeated.
WTF???
In reply to zakmundo, post #9
I haven't looked at Carpetright for a long while, but it occurs to me that they are very well positioned for that point (if and when it arrives!) when householders have to replace their carpets - especially since others have disappeared from the market.
what is their market share?
Floor coverings don't last indefinitely and even those who don't move house will be replacing theirs within the next few years - and when they do, both volumes and margins will rise.
However, it is certainly unusual for the market to look ahead though what seems certain to be a further year or two of pressure on profits....so your WTF? appears appropriate, especially as the market is also simultaneously selling stuff with a great medium-term outlook but with little thought to be happening in the short term. Perhaps there is some form of sector-weighting that gives support - after all, retailers that make any sort of profits appear to be a shrinking gene pool?
ee
WTF???
Surely just supply and demand keeping it above a sensible level.
i.e. holders who aren't likely to sell anytime soon.