Food retailer confident of deal despite widening losses
Butcher and food retailer Crawshaw Group has seen pre-tax losses widen but said it is confident of its long term growth, boosted by its agreement with 2 Sisters food group.
The deal in April saw 2 Sisters food group, owned by entrepreneur Ranjit Boparan, become a significant shareholder in the Crawshaw business.
Rotherham-based Crawshaw, said its value-led strategy and factory shop rollout underpinned by the 2 Sisters deal will leave it well placed to achieve long term profitability as it announced its results for the 26 weeks to July 30 this morning.
Revenue was up 2.3% to £22.1m, while Crawshaw reported a loss before tax of £1.2m (2016: loss of £0.4m), including (£0.4m) exceptional costs, while group like for like sales were down 4.2%.
Crawshaw said profitability in the first half of the year was impacted by sterling weakness and the shape of sales recovery
The company said: “The group’s immediate focus is to accelerate the rollout of our successful factory shop format. These destination sites are particularly attractive as they allow us to offer even greater value to customers through larger pack sizes and value progression. Factory shops are a simpler model to implement and operate, have lower rents and require significantly lower CAPEX.
“Including the three new shops opened in the year, we now have eight standalone factory shop units which are trading above expectation and above our base model. The learnings of our latest openings have allowed us to reduce CAPEX requirements by up to 25% which underpins a circa one-year cash payback on investment. At our target rate of ten new shops per year, we expect our factory shops to account for well over half of group revenue by the end of FY 2020.”
Crawshaw said it is confident that its value-led strategy and factory shop rollout, underpinned by its supply agreement with 2 Sisters, will leave it well placed to achieve a step-change in long term profitability.
Noel Collett, CEO, said: “These results demonstrate progress in ensuring we have high quality products at the lowest possible prices. The improvements to the breadth, depth and price of our ranges are driving the significantly improving trend in customer numbers, which is a key metric of loyalty and success in preparation for the important winter and festive season ahead.
“As part of our focus on achieving unbeatable value, we are prioritising and accelerating the rollout of our proven factory shop format. The economics of these sites are hugely attractive, and they allow us to offer a wider range of fresh meat and associated products at a price not possible in our high street shops.
“We remain excited by our 2 Sisters supply agreement and believe this partnership will be transformational for the long-term growth of the group. Market conditions remain challenging, but we are confident that our focus on value leaves us well placed for the long-term.”
