UK Finsbury confident on Christmas profits
healthy profits in 2005 and claims to have reversed last year's
nightmare Christmas period, despite mixed reports from many
multiple retailers, reports Chris Mercer.
Finsbury finance director John Lomer said that the firm's price increases throughout 2004 together with more efficient managing had ensured the company's cake business, Memory Lane, would carry the group's new found profitability into 2005. Finsbury even expects its speciality bread business, Nicholas and Harris, to have performed ahead of expectations when the company announces its half-year interim results on 22nd March.
This positive outlook is a far cry from Christmas 2003 when Finsbury, then only in its second year, managed a 24 per cent sales increase on 2002 but found itself £0.3 million in debt after a skilled labour shortage and "significant manufacturing inefficiencies" caused problems in meeting demand.
Finsbury later managed to recover to a £0.2 million profit for its full year and now seems to have banished its gremlins during a period when its customer base, the UK's multiple retailers, have experienced problems.
Sainsbury's announced like-for-like sales fell by 0.4 per cent in the four weeks up to 1st December. Marks & Spencer, already struggling, also said that food sales dropped by 1.7 per cent in the six weeks up to New Year. To cap it all, the British Retail Consortium dubbed 2004 "the worst Christmas for a decade" after December retail sales (food and non-food) were down 0.4 per cent on 2003.
Finsbury's Lomer accepted there had been difficulties but that these figures could be misleading because sales had begun to pick up in the week before Christmas, and January had continued the upward trend. In fact, the 'big five' (M&S, Tesco, Asda, Sainsbury's and Morrisons) did record a 2.3 per cent sales rise in the final three months of 2004, albeit down on last year's 5.6 per cent.
Finsbury's seat in the premium sector has helped it through and this should keep profits up in a UK cake market which is predominantly growing by value and not volume. A lucrative deal partnership deal with Nestlé is also starting to come good; Finsbury has Nestlé brands in all mainstream supermarkets and claims to be working on a raft of new products for 2005.
Lomer said he thought health issues would continue playing a prominent role in the cake market through 2005; reducing cake consumption but increasing spending. "When consumers treat themselves by spending their earnings on a cake, they want a nice one," he said.