In the results for the year ending 27 August, the news wholesaler heralded a rise in high margin one-shot and collectable sales as helping to offset inflationary costs, with revenues from the categories up 43% year on year.
There was also good news at the company’s new initiatives designed to add new revenue to the business away from just supplying newspapers and magazines. A waste collection service offered to stores in some Smiths News regions and a parcel sorting and distribution service with a national courier firm were described as making ‘modest’ contribution to the wholesaler’s profits.
Speaking to investors, chief executive Jon Bunting described the store waste recycling scheme stating: “After encouraging early trials, we are now expanding this, with nearly 50 customers signing up each week.”
Together with renting out depot space to firms like home news delivery firm NewsTeam Group, the initiatives added circa £900k in revenue to Smiths News across the year.
Bunting also revealed it had distributed more than 50,000 DVDs into a leading supermarket over the summer. The project is thought to be magazine distributor Frontline’s tie-up with Tesco, first revealed by Better Retailing last month. He the project used automatic replenishment based on sales data and merchandisers to create “A super simple solution for an otherwise time consuming and complex category”.
While stating retail customers were ‘broadly flat’ at 24,000, Smiths News recognised retailers ending or shrinking newspaper and magazine rangings in favour of ‘higher margin products’ was major risk.
However, none of the three countermeasures listed addressed the problem for independent shops. Smiths News instead said it was hunting out emerging new retailers to work with, saving supermarkets money with Rascal – Smiths News’ magazine sales-based EPoS based returns (EBR) system and looking to “extend EBR to newspapers in order to broaden efficiency-benefits to major retailers.
Newspaper industry sources previously told Better Retailing at least one major publisher had fought back on previous attempts to introduce EBR on newspapers. Asked about news publisher opinion on EBR this week, Bunting responded: “The role of Rascal has been to make sure our major retail customers reduce waste and shrink in their stores and therefore improve the category profitability, it started with magazines, it’s now moved on to collectables in some cases and I’m sure overtime newspapers will also adopt an EBR model or something similar to that.”
Last year, Smiths News wrote down its expectations for Rascal after rivals Menzies launched their own system, competing with Rascal for major contracts. However, in the latest results Smiths News said “The potential challenges anticipated to arise in the prior period, have not materialised with the successful renewal of contracts previously considered to be at risk.“
In its investor call, Smiths News also claimed retailer and publisher response to its new MyMags partnership with Lucid Retail had been ‘very positive’. The scheme allows stores to sell digital copies of magazines either not stocked or sold out. “We’re hoping what we’re driving is a complementary sales not only for ourselves but for our retailer and publishers too,” Bunting explained.
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