Carpetright eyes Allied Carpets' 'hidden gem' insurance business

A source close to Carpetright said the retailer is "in talks with Allied about a whole bunch of different things" including acquiring stores.

He added Carpetright could "possibly acquire" Allied Carpets Inspections, but warned that it is "so early on in the talks" that it is hard to predict the outcome.

Allied Carpets Inspections, a newly formed company that was created when Allied Carpets collapsed into administration earlier this month, is headed by former Allied Carpets chief executive Clive Hutchings. Sources close to Allied called its insurance arm a "hidden gem".

Carpetright revealed at its preliminary results in June that it wanted to enter the insurance market, as it seeks alternative revenue streams in the struggling floorings market. Its present insurance business is administered through an independent third party.

Allied Carpets is operating without a bank at present, with Valco providing the finance, although it is in talks with banks to secure funding.

It is understood that Gary Favell, former chief executive of failed retailer MFI, has been announced internally as the new managing director of Allied Carpets Retail.

It is also thought Clive Hatchard, former chief financial officer of collapsed retailer Land of Leather, is to be appointed to the same role across both Allied Carpets' retail arm and its insurance arm, with an announcement expected by the end of August.

Former Woolworths chief executive Steve Johnson, who was hired by Valco on a consultancy basis about six weeks ago, is thought to be seeking a more permanent role outside of Allied Carpets, although sources said he could yet be appointed chairman at the retailer.

It is thought Johnson might also do some consultancy work for Borders UK, also owned by Valco.