JW Filshill, operator of the KeyStore convenience store brand, has recorded a 5.8% drop in turnover to £143m for the year to 31 January 2016.

The decline in turnover reflected the “market-wide trends that are seeing tobacco sales continue to fall and price deflation evident in many product categories,” it said.

However, turnover of grocery and impulse categories grew during the year and helped improve gross margin from 6.7% to 6.8%. It posted pre-tax profits of £0.9m.

Filshill said the results were “satisfactory” considering the challenging marketplace and that it had plans in place to return to revenue growth.

The company has ramped up investment in IT and logistics in the past year and made a number of business development, sales and marketing appointments.

“The market remains highly competitive but we are well positioned to take advantage of the opportunities we are creating and to return to revenue growth,” managing director Simon Hannah said.

“Cost control continues to be a key focus for the business although wage costs have risen as we continue to support and invest in our workforce.”

A new fascia for top-end KeyStore retailers will be rolled out this autumn and the company plans to focus on offering “strong promotions plus wide-ranging advice and support, including IT, marketing and social media expertise, to its retail customers across Scotland and the north of England”.

“We’re in a strong position given current market conditions and while we continue to measure revenue, gross margin and operating profit as key financial indicators we also monitor non-financial KPIs including staff performance, vehicle fuel performance, sales service levels/range achievements, returned orders and early warning date codes as part of our business performance review,” Hannah added.

Filshill currently supplies 168 KeyStore outlets across Scotland and the north of England and has 1,400 independent cash and carry/delivered customers.