Booker's results show good form ahead of Tesco deal

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Booker’s results show continued overall growth, with a 0.6% fall in like-for-like retailer sales offset by a 4.4% increase in catering sales.

The wholesaler said it will be “business as usual” while the Competition and Markets Authority considers the merger, with the business still expecting Tesco’s acquisition to be completed by early 2018. Booker also stated in its results that the merger will be good for the market, “This combination should improve choice, quality, prices and service for the UK consumer. It should also help the Booker catering, retail and small business customer prosper in a challenging market.”

It’s not a position everyone holds. A recent survey of over 2,500 independent retailers by rivals Bestway found that 17% believed it was bad news and nearly 72% were not sure of the impact the merger would have.

Commenting on the level of retailer support for the merger, Booker CEO Charles Wilson told Retail Express, “It’s the same as with the Budgens and Londis acquistions. Retailers want to see the proof in the pudding. It’s only when they see the costs go down and the quality of service go up that they’ll make up their mind.”

Booker’s results show a 15% increase in profits before tax to £174m, suggesting the company is weathering the inflation driven price rises which are threatening retailer margins. Part of the reason for this is Booker Wholesale’s ability to leverage its buying power to deliver lower prices which the results show to be 3.1% cheaper than the cash and carry market, up nearly 1% from the previous year..

Their symbol groups paint a mixed picture, with Budgens sales declining by £41m to £251m.  Meanwhile, Londis, Premier and Family Shopper all saw sales growth totalling £40m (£33m, £5m and £3m respectively).

In line with long term trends, tobacco remains a declining sector for the distributor, rising by less than inflation. Explaining this, Wilson referenced the upcoming legislative changes which he called, “an absolute nightmare.” He continued, “Tobacco is weak because 90% of the SKUs retailers sell have been banned, it’s affected independents a lot more than multiples.”

By Jack Courtez Avatar
By Jack Courtez 18 May, 2017

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