Palmer & Harvey has vowed to match the price of cigarettes in cash & carries to offset a 4.55% decline in full-year tobacco sales following the loss of business from Somerfield, Wine Cellar and Threshers.
Aside from these structural losses, P&H’s tobacco sales rose 5.2% in the year to 2 April.
Finance director Jon Moxon admitted there had also been a volume decline because of the competitive pricing from C&Cs, although this had been partly offset by price increases.
“We’ve been cheaper than other delivered wholesalers but more expensive than C&Cs,” he said. “We’re about to close the gap.”
Total sales at P&H fell 4.8% during the period, but non-tobacco sales excluding the loss of key accounts were down by just 1%. This was driven by declines in forecourts, but offset by convenience growth.
However, pre-tax profits were up from £0.2m to £5.9m, and EBITDA up from £40.2m to £44.2m. Moxon said the wholesaler was pleased with the group’s performance in “an unquestionably tough economic environment”.
Highlights included: a 10% reduction in cost base; securing the chilled distribution contract for Martin McColl; and a new automated tobacco-picking line at P&H’s Medway depot.