Premier Foods basket

Sales of Premier Foods’ power brands were up 2% in its third quarter

Premier Foods’ outlook for the full year remains unchanged despite a 3.2% fall in total sales in its third quarter.

Sales for the three months to 30 September fell from £292.5m to £283.2m, but sales of its power brands – including Hovis, Mr Kipling and Oxo – were up 2% (3.3% year to date).

“Overall, I’m encouraged by the progress we are making in what continues to be a highly competitive market,” said CEO Garvin Darby today. “The intensity of promotional activity in our markets remains high while our categories were significantly impacted by the hotter weather in July and early August.

“We continue to make good progress against our strategic priorities supporting our category-based approach”

Gavin Darby

“We have grown our Grocery Power Brands for a further quarter, completed a major restructuring of our bread supply chain and our plans to reduce complexity across the business remain on track.”

Sales of supporting brands were down 9.8% in the quarter. Premier said it was hoping to slow this decline by giving this part of its portfolio “further focus”.

In July, Darby revealed plans to bolster its second-string brands – which include Smash, Bird’s and Paxo – by taking a category-based rather than a brand-based approach, and by boosting their sale in convenience stores and discounters.

“We continue to make good progress against our strategic priorities supporting our category-based approach,” he said today.

Non-branded sales were down 11.4% in the quarter, as Premier continued to withdraw from lower-margin business. Non-branded sales now comprised 10% of its grocery sales, the company said, adding that it had pruned the number of lower-margin products in its portfolio by more than 270 in the quarter.

The company continued its efforts to reduce its supplier base by 50%, with 83% of its procurement spend now with just 250 lead suppliers.

“Against this backdrop, and as the company enters the important Christmas trading period, expectations for the full year remain unchanged,” Darby added.

There was no mention in today’s update of a rumoured £250m refinancing package to help manage Premier Foods’ estimated £858m net debt.