Heron Foods is continuing to struggle to keep up with its long-term estate growth target of 20 new stores a year, newly filed accounts have revealed.
The B&M-owned frozen food retailer opened 16 stores in the year to 26 March 2022, but also closed 11 under-performing ones as leases ended, meaning its estate grew by five branches.
The previous year, in 2020-21, Heron Foods opened 17 branches and closed four, having scaled back its usual target to 15 new stores owing to the disruption of lockdowns.
It also fell short of 20 in 2019-20, opening 16 stores while closing four.
It is not the only retailer to struggle to meet a long-term estate growth target. In September, Aldi UK & Ireland CEO Giles Hurley acknowledged the discounter’s store opening programme was proving more challenging than anticipated, thanks to delays in securing planning permission and construction materials since the pandemic.
Iceland MD Richard Walker also complained of lengthy planning delays earlier this year, saying every new Food Warehouse store was being held up by under-resourced local councils and overcomplicated rules.
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Despite falling short for a number of years, Heron Foods’ latest accounts reiterate the long-term target for the year ahead. “Central to the future success of the company is the store growth plan,” the accounts say. “The company has a strong pipeline for new store openings through FY23. The directors have set a target of 20 new stores for FY23. The company will continue to refurb and relocate stores as and when required.”
Turnover dipped 3.5% to £419m, following a pandemic-fuelled boost to sales in the previous 12 months.
Operating profit fell 11% to £11m as margin reduced slightly against the backdrop of a competitive market, logistics challenges and inflationary pressure on stores and wages.
B&M also set out estate expansion ambitions for Heron Foods following its acquisition of the chain in 2017. In its annual shareholder’s report in 2019, when Heron’s estate stood at 281 stores, B&M said it had “the capacity to become multiple times larger as we look to roll it out in the future beyond the north of England, where most of those stores are located, into other regions across the UK”.
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B&M’s latest annual report, published in June, puts the Heron Foods estate at 311 stores.
Heron Foods has also dramatically scaled back its supply of chilled and frozen food to B&M stores. It began supplying about 80 B&M stores in 2017 and continued to do so until 2021. However, the latest accounts reveal the number has dropped to 35.
It follows the opening of a one million sq ft B&M warehouse in Bedford in 2019, complete with multi-temperature storage, paving the way for it to supply frozen and chilled food to the variety discounter’s stores.
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