No significant growth for Booths as upmarket grocer warns of price war domino effect

In an interview with The Yorkshire Post, Edwin Booth said Booths was “stand on” in the year ending March 2015 with unaudited sales of around £280m in spite of opening a new store.

He said volumes held up but revenues slipped as a result of food deflation of around 4 per cent during the period.

Mr Booth said profits have been hit quite heavily by the cost of integrating fresh produce supplier Sharrocks into the business but he is hopeful that the acquisition of November 2013 will yield some benefit in the future.

He said profits were also impacted by operational issues in the lead-up to Christmas as a result of strong interest in the nationwide delivery service. The company set up a project group in February to address the issues.

The family-owned company has 32 stores, including three in Yorkshire at Settle, Ilkley and Ripon. Booths will open four stores this financial year, including two replacement ones.

Mr Booth said he plans to consolidate investments made over the last two years and operational changes to improve efficiency and concentrate on delivering better customer service.

He said Booths will spend capital on refurbishment rather than new developments. “The same sort of story you are going to get from a lot of multiples as well - let’s make a bit more out of what we have got out of this increase in this space,” he added.

Mr Booth shared his analysis of the state of the supermarket sector. He said: “As we ran into the depths of the recession, as we knew it, the major stores were still rushing headlong for space and they were starting to cannibalise their own sales and not only that it’s apparent now they were looking to uphold retail prices to maintain margin, which was a golden opportunity for the discounters to jump onto the train with their low cost base and an offer which was instantly attractive to a great number of customers and the public who are finding it very hard to make ends meet.

“You have seen the tremendous rate of double-digit growth these discounters have enjoyed, particularly Aldi and Lidl, and that then spiked the major multiples into action and they in turn put a lot of pressure on their supplier base to provide the money with which to combat the leakage to the discount sector.

“There has been a domino effect right across the piece. The discretionary market, represented by Marks & Spencer, Waitrose, Booths, farm shops and delicatessens, has held up remarkably well but hasn’t been completely immune from the issue at stake.

“Witness the way in which Waitrose has continued to track the major multiples in their pricing initiatives in such a way as to spoil its own profitability.”

Waitrose, Britain’s sixth largest supermarket, reported a 24.4 per cent fall in profits last year. Booths has been described as the Waitrose of the North. Unlike Waitrose, it does not have any stores in the prosperous south to feed the business, said Mr Booth.

He added: “Those companies nationally that have been primarily exposed to the northern heartlands - Asda is a good example of that and Morrisons obviously - have found it pretty tough.”

Mr Booth said the big supermarkets are in “a perfect storm and there isn’t a perfect umbrella available to keep everybody free of getting extremely wet”.

Booths was founded in 1847 and is headquartered in Preston. The majority of its stores are in Lancashire and Cumbria.

Mr Booth said he has no plans to open any more stores in Yorkshire in the near future but beyond the next two years the company still looks to Yorkshire for growth in the future.

Family members in Britain and overseas hold 96 per cent of the shares with employees holding the remainder.

Henry Booth, the sixth generation of the family and the chairman’s nephew, joined the business three years ago and is on an induction programme.