Costcutter sales slumped 18.5% in the year to 31 December 2017, according to results posted this week by its owner Bibby Line Group.
The symbol operator said it was “significantly impacted by supply issues resulting from the collapse of P&H”. Its former wholesale partner went into administration in November. It also attributed the fall in sales to the full-year effect of losing a major contract to supply 300 Motor Fuel Group stores to Booker in 2016.
The P&H collapse resulted in exceptional charges of £42m, including a non-cash goodwill impairment of £35.9m.
Despite the troubles relating to P&H, Costcutter reduced its losses over the period. It recorded an operating loss of £7m compared with £11m in 2016.
Costcutter CEO Darcy Willson-Rymer told The Grocer the retailer’s EBITDA was £3.9m, an improvement of £3.6m on 2016 and up £11m compared with two years ago.
Willson-Rymer did not go into detail on trading so far during 2018. However he suggested 2018 would be a “tale of two halves” with it struggling in the first half of the year when it was operating interim supply arrangements with a number of different wholesalers before the picture bgan to improve when its current deal with the Co-op kicked in at the end of May.
So far Costcutter had introduced about 800 Co-op own label lines. It said it expected 1,000 to come on stream over the next few months. It said the range was proving very popular with retailers and already made up 16% of Costcutter’s sales compared with its previous own-label offering Independent, which made up 10% of its sales.
The retailer has also recently opened its second Co-op franchise store in a company-owned site, in Whitkirk, Leeds. Willson-Rymer said the store opened two weeks ago and sales were already up 50%.
The first Co-op franchise opened in February in Guiseley and a third is set to open soon. “After that we will press pause for a while and work closely with the Co-op to assess our progress,” he said.
He also insisted that owner Bibby Line was committed to Costcutter and that he expected to remain part of the group. This comes despite interest from parties such as Bestway and Co-op in acquiring Costcutter.
“We are pleased to report that Costcutter Supermarkets Group (CSG) has now closed the chapter on ‘Palmer & Harvey’ with all outstanding matters relating to the collapse of P&H resolved,” said Bibby Line Group CEO John Cresswell. “We have continued to support the business throughout and are optimistic about the benefits of the new supply deal with the Co-op.
“The business is now focused on growing sales by delivering the best retail offer in the convenience sector. The benefits of the Co-op supply deal are already being seen with excellent levels of availability and retailers reporting positive shopper response to the new range, especially as the Co-op own brand products come into CSG stores.”