Thursday, September 29, 2016

News: Crawshaw's sales growth restoration plan

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Rotherham-based fresh meat and food to go retailer, Crawshaw Group PLC has confirmed a reduction in like for like sales but expansion will continue.

The AIM-listed Hellaby firm is undergoing growth plans that will see it invest £200m, opening 200 stores and creating 2,500 jobs. As new stores opened, standardised offers and price points were also introduced into existing stores but the management has now admitted that they "didn't resonate as well with customers as we thought."

In the six months ended July 31 2016, total revenue for the group increased by 29% to £21.6m from the £16.7m reported in 2015. Like-for-like sales however, dropped by 4.4%. Gross profit increased by 31% to £9.8m and EBITDA (earnings before taxes) was £0.3m (2015: £0.5m) with increased operating costs offsetting sales and margin growth.

Crawshaws described the year ending January 31 2016 as a "transformative year" with a new management team and the appropriate infrastructure in place to deliver the rapid growth plan. The following six month saw phase one of the rollout programme complete with the delivery of nine new trading stores across the period. The total number of stores is now 49.

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The group reported record sales for the previous year but the update to the stock exchange explained that sales had dropped since. Standardised offers and prices were introduced and initial results were encouraging, with strong like-for-like sales and margin through the middle of last financial year. With customer loyalty initially translating into additional sales through bigger, better value packs at higher price points in the first instance, this gave way to waning loyalty and lower sales through the first half of this year.

Sales in the the first seven weeks of the second half of the year have continued to be lower, with like-for-like sales tracking at -15.8%.

Noel Collett, CEO at Crawshaw Group, said: "We have now identified the cause of this sales underperformance by spending a great deal of time in stores with our customers and colleagues. The feedback from these visits was relatively straightforward. Our customers want to see some of the old fresh meat pack sizes, price points and offers that were previously on sale in their specific store.

"As a result, we have made immediate changes to give store managers flexibility to re-introduce local ranging products which has been positively received. We have also significantly increased the number and depth of price-led promotions on fresh meat with managers being given the flexibility to choose the promotions that resonate most with their customers."

Expansion will still continue but the board has taken the decision to open up to 12 stores this year as opposed to the 15 originally planned. The group has found success with its new factory shop location and is planning the trial of up to two further factory shops this year.

Collett concluded: "We are acting quickly to restore sales momentum and feel that this can be achieved in readiness for the important winter and festive season.

"Management focus over the next months will be on supporting stores to deliver for our customers and restore sales momentum in like-for-like and newly opened stores.

"We believe our actions can restore sales momentum, and we will invest in margin to sharpen our value proposition to win back customers and drive sales. We are disappointed with current trading and clearly the outlook for the full year will depend on the result of our actions, upon trading during the important winter and festive season, and upon the timing of our store openings. At this stage, however, we expect our full year profit to be materially lower than our previous expectations."

Crawshaw website

Images: Crawshaws


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