Following in the footsteps of Ted Baker and the Body Shop, Carpetright look set to appoint Administrators. A notice of intent to appoint administrators was filed at court last week suggesting an out of court appointment being imminent.
Struggles
This is not the first time Carpetright has found itself in financial turmoil. In 2018 Carpetright entered into a Company Voluntary Agreement (CVA) with its creditors. Increased competition in the form of rival Tapi Carpets causing problems for the retail giant. Tapi had only been incorporated 4 years earlier but was founded by Carpetright’s founder Lord Harris son, Martin Harris. The Harris family had clearly learned from their experience of owning Carpetright since it was formed in 1988. Tapi saw its sales jump 27% to £137.4m in the year to 31 December 2021, and another 15% to £158.3m in 2022. Tapi now boasts a portfolio of over 175 stores nationwide. Since 2018 there has been an increased rivalry between the flooring giant and Tapi carpets which led to accusations that Tapi had adopted “kamikaze” strategy to take down Carpetright. Whilst Tapi has grown successfully, the once heavyweight of flooring has continued to struggle.
A former Carpetright executive has, however, argued that the demise is not solely due to Tapi but the lack of entrepreneurship in light of the outdated business model which remains largely unchanged since its inception.
No surprise
In addition to the competition Carpetright has faced, senior managing director at FTI Consulting, Dave Philips, attributes supply chain disruption during Covid-19, inflation and the Ukraine war driving up energy prices as adding pressure. Reporting to CITY AM, Mr Philips stated “It is no surprise that businesses strongly tied to the housing market and the feel-good factor of upgrading your home are under significant pressure…With the cost-of-living crisis and interest rates slowing the housing market, both sources of demand have been constrained”. A major cyber attack earlier this year also disrupted business and sales which affected its ability to restructure operations.
Next steps
With around 272 stores and a reported 1,875 jobs on the line, Kevin Barrett, chief executive officer of Nestware Holdings (owners of Carpetright), said: “We remain focused on securing external investment to ensure as few customers and colleagues are impacted as possible… We have begun promising conversations with interested parties that are moving in the right direction, encouraging us that Carpetright has a viable future.”
PWC are reportedly being lined up to take the appointment and will likely seek emergency funding or a buyer of the ailing business.
