Shares have crashed almost 8% in Crawshaw (CRAW) this morning after the value meat retailer revealed a heavy decline in underlying sales in December, despite a record week leading up to Christmas.
Like-for-like sales in the 15 weeks to 24 December slumped 6.1% at the struggling group as fewer customers passed through its doors than a year ago as the big four supermarkets continued to sharpen their offers.
Total group sales for the period rose 0.6%, underpinned by the strength of the growing factory shop format, which helped to offset the impact of lower footfall on the high street and the overall softer consumer sentiment, Crawshaw said in a trading update.
Crawshaw opened two more new factory shop units after updating the City on its first-half results in September to complete the five planned for the year, taking the total to 10 within the 54-shop estate. The factory shops had a “strong” festive period Crawshaw said, accounting for a quarter of group sales.
Sales leading up to Christmas reached a record £1.8m across the group, with almost 3,500 value meat hampers sold.
The group said it had made progress in the period against the strategy to strengthen its position as Britain’s leading value butcher.
However, shares have sank 7.7% to 10.5p since markets opened this morning. It follows a miserable year for the chain in 2016, with the stock the biggest faller of The Grocer 200 (click here for an analysis of grocery and fmcg shares printed in this weekend’s issue), losing 50% of its value.
Crawshaw had soared from just 3p at the start of 2013 to as high as 92p by the end of 2015 as shoppers abandoned the traditional supermarkets in search of value. However, Crawshaw has lost ground as a price war extended into the meat aisles and consumers went back to the likes of Tesco and Morrisons.
CEO Noel Collett said: “On balance, this was a solid core Christmas trading performance against what remains a very tough high street environment. Our biggest ever Christmas week and the record number of meat hampers sold clearly demonstrates the trust our customers place in us for their most important meat spend of the year. This gives us a solid platform to improve trading momentum going into 2018.”
A supply partnership struck with 2 Sisters Food Group last year was “progressing well”, with core poultry supply routes well established and a framework for successful new product category tests landing over the festive period, the group added.
“We continue to focus on strengthening Crawshaws’ position as the country’s best value butcher,” Collett said.
“We are excited by the performance of our factory shops and by the progress of our 2 Sisters supply agreement and, while there is much to do, we remain confident that this combination will be transformational for the long-term growth of the company.”
Peel Hunt head of research Charles Hall said in a broker note that the transition to factory shops continued to be “encouraging”, but there were currently an insufficient number to offset the decline in the high street stores.
“As a result of weaker high street sales and lower gross margin, the loss for the current year will be higher than expected,” the analyst added. “Performance should improve materially as the number of factory shops increases, particularly as these are delivering a one-year payback.”