Carpetright profits hit the floor, but Navision pays off

Flooring retailer Carpetright reported lower group revenues and a sharp drop in pre-tax profits today, confirming a trend that will see retailers report negative revenues in 2009 and begin to investigate driving customers towards mobile commerce.

Carpetright reported total revenues of £236.8 million in its interim results for the 26 weeks to 1 November 2008, down from £251m for the same period last year. Profit before tax was slashed from £27.2m in 2007 to £8.8m. The UK saw the largest reduction in operating profit, down by 67 per cent compared to a decrease of 29 per cent in its European operations.

Chairman and chief executive Lord Harris said, “I expected my 51st year of selling carpets to be extremely challenging, and it has proved to be the case.” He said the company will “exert tight controls over all costs, capital expenditure, stock and cash flow.”

Carpetright announced in the results that it successfully completed the roll-out of Navision software from Microsoft for the management of in-store customer order processing, quotes, orders, electronic point of sale and stock management. Roll-out of Navision was completed by October, on time and on budget. Carpetright said that by completing the Navision roll-out it has been able to reduce its head count.

IT vendor analysts Gartner believe the retail sector will use the savings made from investments in technologies that reduce costs to invest in retailing through mobile platforms.

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John Davison and Mim Burt at Gartner state in a report that brick-and-mortar retail channels will be “revenue-negative” whilst online will be revenue-neutral in 2009. They expect to see a leading retailer to announce that mobile retailing will be driving 20 per cent of customer purchases by the end of 2009. CIOs investigating mobile commerce platforms are advised to consider how their stores will be affected and how mobile can generate revenue independently of the stores.

The authors also believe software-as-a-service technology for a variety of retail business functions will be adopted by 25 per cent of the market.

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