Investment in IT and store remodelling has hit discounter Heron Foods’ profits, the company’s latest financial statements reveal.
Pre-tax profits for the year to 27 December 2014, just posted at Companies House, fell 17.4% from £2.3m to £1.9m on turnover up 2.2% to £255.1m in an increasingly competitive, deflationary market.
Like-for-like sales fell 1.8% and EBITDA dropped 17.7%, from £15m to £13.1m.
“We have been investing substantially within the business, particularly within IT and continue to do so. We are rolling out new IT programmes as we speak and we expect to see the return on that investment,” said commercial director Mike Igoe.
The Yorkshire-based chain opened 12 new outlets and relocated a further five stores during the year. It permanently closed eight.
Heron told The Grocer a year ago it would continuing to expand at a rate of 25-30 shops a year for the next five years.However, the accounts note a “strong pipeline” for new openings with the expectation of more than 12 new and relocated stores in 2015. Igoe said that was probably a more accurate number. “As we’ve opened new stores to the new model, we have closed some of the smaller stores. The older, more traditional, stores are very low square footage stores. There’s quite a bit of churn gone on in the group,” said Igoe. He added the company was strengthening the portfolio in terms of the quality of the estate. “With churn it’s very difficult to refer to a definitive number of new stores.”