Premier Foods basket 2016

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The recovery at Premier Foods (PFD) took a hit in the second quarter as branded grocery sales slumped 12.4%.

CEO Gavin Darby blamed hot weather in September for driving customers away from the gravy and stocks category, which declined 13% in volume terms, and desserts, which fell 9%.

The performance in the division, which was worse than expected, pushed down group sales by 5.4% in the 13 weeks to 1 October to £172.5m – and by 1.8% in the first half.

Premier also warned that trading profit for the half would be “slightly” lower than a year ago, but profit expectations for the full year remain unchanged thanks to cost management.

“We are disappointed that our grocery business reported materially lower sales in the quarter due to warmer weather; particularly in September,” Darby said.

“However, our sweet treats and international businesses continued to demonstrate their strong momentum, delivering against our strategic priorities and growing over 6% and 13% respectively.”

Non-branded grocery sales partly offset the decline in branded in the quarter, rising 8.8% as a result of higher business-to-business volumes.

Sweet treats reported a sixth consecutive quarter of growth at 6.4%, as both the branded and non-branded businesses delivered increases from new products and new business wins respectively.

“We remain very confident in our strategic progress, our customer relationships are strong and we have an extensive new product innovation programme planned for the balance of the year,” Darby added.

“We expect group sales to grow between 2-4% in the second half of the year and our profit expectations for the full year remain unchanged.”

The trading update did not reveal the profits figures.

Shares in Premier have fallen almost 12% to 46.3p after markets opened.

Morning update

Real estate investor Tritax Big Box has agreed to purchase a Co-operative distribution facility for £56.5m. It reflects a net yield of 5.5% on the asset acquisition. The warehouse in Thurrock is one of The Co-op’s six strategic UK distribution hubs and the only one located in the South East. Built in 2005, it has a gross internal area of 322,684 sq ft across 15.25 acres. The adjacent lorry parking facility, which has development potential and covers a separate 4.1 acres, was constructed in 2012. The distribution warehouse is subject to five yearly upward only rent reviews to the higher of either a guaranteed fixed uplift of 2% per annum or open market rent. The next review for the warehouse is due in December 2020.

Tritax partner Colin Godfrey said: “We are pleased to have acquired the Co-op’s South East distribution facility at Thurrock, further diversifying our portfolio tenant mix with an established covenant in a core distribution location. Prime quality big box logistics warehouses are in high demand from occupiers requiring close access to the densely populated London conurbations, but there are no units of this size or greater currently available to let around the M25 ring.”

Brewer Marston’s will report another year of “solid progress” with underlying growth across all of the pub divisions and continued “outstanding” performance from the beer business. A trading update for the year ended 1 October said underlying profit before tax was in line with management expectations.

In brewing, Marston’s beer brands performed “very strongly”, with own-brand volumes up 13% for the financial year and profits in line with management expectations.

In the destination and premium division, like-for-like sales were 2.3% ahead of last year, including food like-for-like sales growth of 1.7%, and wet like-for-like sales growth of 2.3%, underpinned by strong growth in room income. In taverns, like-for-like sales were 2.7% ahead of last year, with growth of 2% in the past 10 weeks, including a strong performance in the franchise estate. In leased, like-for-like profits are estimated to be up 2% compared to last year.

CEO Ralph Findlay said: “Trading has continued at similar levels since the year end which is encouraging. In addition, our new pub-restaurants, lodges and Revere premium pubs all continue to perform well. Looking forward, our estate is well balanced and we have a well-developed, strong pipeline of sites to continue our current level of expansion.”

Yesterday in the City

The supermarkets all fell behind yesterday despite the latest BRC/KPMG Retail Sales Monitor showing that food put in its best performance since November with sales 1.6% in the three months to 1 October.

Tesco (TSCO) was down 0.8% to 201.5p, Morrisons (MRW) fell 0.7% to 217.1p and Sainsbury’s (SBRY) slipped 0.6% to 232.5p.

Booker (BOK) was also down 2.1% to 171.2p ahead of interims on Thursday. Greencore (GNC) also fell 1.4% to 304.3p.

The FTSE 100 closed 0.4% down at 7,070.88 points, having hit a record high of 7,129.83 points earlier in the session as international businesses on the index continued to be boosted by the plunge in the value of the pound.

Risers yesterday included Marks & Spencer (MKS), up 3.3% to 332p, TATE & Lyle (TATE), up 2.7% to 797.5p, and WH Smith (SMWH), up 2.1% to 1,534p ahead of its annual results on Thursday.