Butcher hit by falling high street sales reports annual £13.5m pre-tax losses

Rotherham-based Crawshaw Group has reported annual pre-tax losses of £13.5m as it has been hit by falling high street sales which it is continuing to offset through a factory shop roll-out.

The butcher and retailer this morning reported its year-end to 28 January 2018, which showed that while revenue had remained at £44m, it made a pre-tax loss of £13.5m – widening from £1.4m the previous year – which it said was due to a one off non cash impairment charge of £10.6m and £800,000 exceptional costs

The group was hit by a 5.4% like-for-like sales reduction in its high street estate, with customer numbers down and “challenging market conditions” in Q4. Two unprofitable shops closed during the period. 

Crawshaw said its margins were impacted by 1.5% from sterling depreciation and that its investment in value was partially offset by benefits from strategic partnership with 2Sisters Food Group, which it entered into in May 2017.

The firm is undergoing a factory shop rollout to underpin long-term profitability. During the year, it opened five new factory shops. Factory shops trading in the period delivered 22% of Group sales -up from 15% in 2016.

The total number of factory shops now stands at ten and a further five-ten per year are expected to open.

Noel Collett, chief executive, who announced he is to leave the company this year but is remaining in position until a replacement is found, said: “This has been a disappointing year for Group sales. Whilst we have been pleased with the strong performance of our factory shop outlets, sales across our high street estate have proven more challenging, exacerbated by the well documented high street pressures.

“Against this, however, we have made operational progress to strengthen the business. We are confident that the rollout of our unique factory shops format and improvements in profitability across the high street estate will leave the Group well-placed for future growth.”

The said it was well advanced in recruiting a new CEO and CFO following the announcement on 23 March that Collett and Alan Richardson (CFO) are to leave the business later this year.

Crawshaw added: “Trading in our high street shops for the first 12 weeks of the new financial year has remained challenging, exacerbated by recent poor weather and continued high street pressures. However, our factory shop format continues to perform well.

 “We believe our strategy to build factory shops and reduce the dependence on the legacy high street business is the right one, whilst reducing costs and improving revenue through the exceptional value for money we offer.  We expect a new leadership team to support this strategy and bring new ideas and energy in its execution.”

Jim McCarthy, chairman, said: “While sales for the year have been challenging, I am confident that the repositioning of the Group towards our successful factory shop model will improve long-term profitability.

“I expect to provide an update on a new management team in due course, who I am confident will help further develop Crawshaws’ market leading value and drive improved performance in both factory shops and high street stores.”