Accounts filed for Costcutter’s parent company the Bibby Line Group (BLG) show that sales at the symbol group declined to £512m in year to 31 December 2017, down from £628m in the previous year.
Speaking to Convenience Store, Costcutter Supermarkets Group chief executive Darcy Willson-Rymer attributed the decline to poor product availability and range reduction through wholesale partner Palmer & Harvey (P&H) before its ultimate collapse, and the exiting of “unprofitable” accounts with forecourt dealer group MFG.
Profitability at the symbol group improved, with EBITDA of £3.9m for the year, up by more than £3m on the previous year. This appears in the accounts as an operating loss of £7m on a pre-tax profit basis when it includes payment of interest on loans to the BLG parent company. The group is currently simplifying its balance sheet, to make profitability of its various operating companies more transparent.
The accounts include a one-off write-down of £6m agreed with the administrators of P&H for net monies owed by Costcutter. Overall, exceptional charges of £42m, including a non-cash goodwill impairment charge of £35.9m, were attributed to the former wholesaler’s collapse in November 2017.
Over the period of decline and collapse at P&H, Costcutter lost 20% of its retail customer base, with purchase loyalty through the group falling to 50%. Willson-Rymer says he now aims to increase that to at least 75-80%.
“We have to rebuild the trust of retailers and get them to bring their full spend back. We have made improvements and are on that trajectory now,” he said.
“In the months after the collapse of P&H and before the Co-op we used 12 different wholesalers to service our retailers without rebates, at nil profit and with payment up front. The focus during that period was always to continue to supply retailers and the team is very proud of what we achieved,” he continued.
“We have closed a chapter with P&H and can get back to the core mission of helping independent retailers thrive. We have moved on to a new supply deal with the Co-op with a better range, better promotions and better terms for retailers, and a new shopper attraction in the Co-op own-brand range.”
Willson-Rymer added that the symbol group continues to have a sustainable future within its parent company. “We continue to enjoy the support of Bibby Line Group,” he said. “There is no ‘for sale’ sign over us.”
Overall, the Bibby Line Group, which comprises financial services, distribution marine services and site equipment businesses as well as retail, posted an operating profit of £0.2m on turnover of £922m. After exceptional items, the overall net loss at the group was £15m.