Farmfoods has not grown its estate, despite surprising the industry last year with a flurry of deals for new stores and plans for expansion in the south.
In May 2024, the frozen food retailer’s property team told The Grocer of plans to open between 20 and 30 new shops a year, with a particular focus on London. It had already struck 24 property deals so far that year.
However, it has the same number of stores across the UK now as it did then, at 340, suggesting it has been closing shops as quickly as it has opened others.
The retailer is said to have also slowed down property dealmaking activity.
“They almost came out of nowhere with a lot of activity last year, and then they slowed right down, presumably in light of macroeconomic conditions,” a source at a major commercial landlord told The Grocer.
A BRC survey of retail finance leaders in July found one in six (15%) had delayed opening new stores as a result of National Insurance and minimum wage rises in April, which were announced in last year’s budget. Tax and regulatory burden, including the impact on employment costs, were among the top three concerns of almost nine in 10 CFOs.
A Farmfoods source said its appetite for deals naturally went up and down from time to time but there was no fundamental change to its 70-year-plus strategy of opening as many shops as it could afford to, to bring quality and value to as many people as possible.
Farmfoods has posted about several store openings on LinkedIn this year, including in Greater London, Banbury in Oxfordshire, and Norwich, the latter a relocation. The latest opened in September in Stanley, County Durham.
At the same time, a number of Farmfoods stores have closed this year, including in Dundee, Glasgow’s Knightswood and Ilkeston in Derbyshire. The closures included the first ever Farmfoods store, which had been trading in Aberdeen since 1954.
Farmfoods went on the hunt for new stores last year after its turnover breached £1bn for the first time in 2023. New accounts at Companie House this week showed its turnover rose by another 2.6% to £1.04bn in the year to 28 December 2024, while operating profits dipped from £23.9m to £9.9m. A £23.3m gain on the disposal of fixed assets helped boost profit before tax to £30.5m, up from £23m in 2023.
The company invested £50.3m in freehold property and assets in construction in 2024 and gained £23.3m from the sale & leaseback of properties.
“The group continued to trade profitably during 2024. However, our commitment to keep prices low for our customers while facing increased cost pressures throughout the business resulted in a reduction in profitability compared to the prior year,” the accounts said.
“The group made significant investment in opening new retail stores while also increasing capacity within its distribution function. The group plans further investment in shops in the coming year.”
The work included the expansion of a cold store facility in the Midlands.
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