Premier hit by slow grocery sales

A deal to hive off Premier's Hovis arm into a joint venture with US private equity group Gores will complete on Saturday.
A deal to hive off Premier's Hovis arm into a joint venture with US private equity group Gores will complete on Saturday.
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The maker of Mr Kipling cakes and Ambrosia desserts felt the impact of the supermarket sector’s troubles today with a 6.2 per cent drop in quarterly sales.

Premier Foods, whose portfolio includes Bisto gravy and Loyd Grossman sauces, described the grocery market as subdued and said a later Easter and milder weather were also to blame for the fall in the three months to March 31.

It expects that trading conditions will remain tough over the rest of the year but said it is on track to meet annual forecasts as it ramps up product launches and marketing spending over the second half of the year.

Premier, which recently completed a £1.1bn financial restructuring, said total sales were 6.2 per cent lower at £186.3m in the quarter, with the figure for front-line brands such as Mr Kipling down 3.5 per cent at £123.7m.

The group’s support brands, which include Homepride and Angel Delight, were down 10.4 per cent to £42.8m.

All four major supermarket chains saw declining sales in the 12 weeks to March 30 after the latest till-roll figures from Kantar Worldpanel showed further market share inroads were made by discounters Aldi and Lidl.

Premier said sales of Loyd Grossman sauces grew during the quarter, supported by new lasagne sauce pouches, but Sharwood’s sales were down due to a “particularly competitive” market in cooking sauces.

In desserts, Premier launched its new Ambrosia mini-pots range and its larger Devon Dream pots, while Mr Kipling strengthened its market share position.

Major investment at its factory in Barnsley will see a new Mr Kipling Snackpack production line commence early next year.

Meanwhile, a deal to hive off Premier’s Hovis arm into a joint venture with US private equity group Gores - cutting Premier’s holding to 49 per cent - will complete on Saturday.

Chief executive Gavin Darby said that with the restructuring now complete the company was in a position to “focus all our energies” on its growth strategy.