Harris rolls out £29m Benelux buy

LORD Harris of Carpetright is going Continental, revealing that his floor coverings group has agreed to pay up to e45m (£29m) for a half-share of a Benelux carpet retailer. Carpetright will also have an option to buy the rest of the Carpetland chain, which has 92 stores, within three to five years at a price multiple of nine times pre-tax earnings.

Harris, who has retained his joint roles of Carpetright chairman and chief executive, said Carpetland's margins were running at just 4% compared with Carpetright's 14%. He aimed to lift this to 7% within a year by shipping carpets from his group's cutting warehouse in England and will spend e8m upgrading Carpetland's '1970s-style' stores. Up to e35m of the purchase price will go towards buying Carpetland's 12 freehold and three long-lease properties.

Carpetright also revealed its pre-tax profit jumped 18% to a record £52.5m for the year to 27 April despite the adverse impact of an unusually warm Easter. Like-for-like sales growth in the first 8 weeks of the current year dipped to 4.2%, from 6.7% in the year just gone.

'Sales have not been great but reasonable,' Harris said. 'People went to garden centres at Easter rather than carpet shops.' Margins rose 0.6 percentage points to 14.4% and the year's dividend is 33p a share, up from 27p.