United Carpets shares rally on sales increase

United Carpets shares (LON: UCG) surged +15% on Monday’s opening after posting a 24% increase in sales for the 19 weeks to 1 October 2020.

The specialist retail carpet and floor covering retailer said that despite no revenue generated during the eight weeks over lockdown, strong sales since have kept the group in a strong financial position.

United Carpets expects further challenges to arise from the pandemic and Brexit, which may deter demand.

The group warned that a “no-deal” Brexit may result in additional import tariffs on flooring products, and the longer-term impact from Covid-19 on unemployment and economic recovery may lead to a challenging retail environment in the next year.

Paul Eyre, the 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.”

United Carpets had cash and cash equivalents of £5m from the end of September. Of this, £2m was received under the Coronavirus Business Interruption Loan, and the group also gained from the deferral of £1m of tax payments.

“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,” said the group in its trading update.

United Carpet shares (LON: UCG) are currently trading +19.69% at 3,89 (1017GMT).