Whittard's brews up rising profit

Sales for the half to 30 November 2003 were up 15.8 per cent to £19.3 million, with like-for-like sales up 5.8 per cent for the period. More encouraging still is the fact that sales in the first eight weeks of the second half (including the important Christmas period) were ahead 9.7 per cent on a like-for-like basis, suggesting that further advances will be made in the second six months.

Also encouraging was the fact that all the group's divisions - UK retail business, international, UK wholesale, mail order and Internet - contributed to the result. IN addition, all six new shops opened during the half performed well and the company said that it planned to open more in 2004. The company currently has 109 outlets in the UK, as well as two areas within larger stores in the US.

Richard Rose, chief executive, said that Christmas trading had been very strong, and that the company continued to attract new customers into its shops, tempted by a broader range of more added value products which in turn helped lift the average transaction value compared to the previous year.

"The result for the six months under review is most pleasing, given that our peak trading periods of Christmas and Easter both fall into the second half of the financial year. This underlines the strength of our brand both in the UK and overseas, and there remains much potential for further growth,"​ said Rose.

This is the second successive year that Whittard has shown positive profit growth, albeit from a low base, evidence that its 'back-to-basics' approach is paying off. The company has not tried to reinvent the wheel in turning itself around, preferring instead to work on doing what it does already, but simply doing it better.

At the same time, it has begun the slow rollout of operations elsewhere in the world - mainly the US, where three more store-in-store concepts are being considered - and via the Internet and mail order, where the overheads are low and the margins fairly high.

Specialist retailers are increasingly becoming a thing of the past in the UK - Thorntons, the other main food retail specialist has had its fair share of problems in recent years and is currently up for sale - and diversifying sales into other markets is key to survival.

While Whittard is yet to go fully down the same route as Thorntons and sell its products through the wider food retail sector (which would in any case be harder for it to do, given the already expansive range of tea and coffee available in most multiples), it has adopted a similar approach in that it has greatly expanded the range of other products which it carries - although most are loosely related to tea and coffee, its core business.

This, as Rose suggested, has increased footfall in its outlets, and that is clearly a good start. The key now will be to continue to refine the product offering to make a real point of difference with other retailers - in particular the multiples - to continue the slow but steady return to profitability.