Patisserie Holdings, the Luke Johnson chaired operator of the Patisserie Valerie chain, has reported a 15.6% increase in EBITDA to £12.2m for the six months to 31 March 2017.
Revenue for the 192-strong group for the period stood at £55.5m, an increase of £5.5m or 11%, whilst pre-tax profit was £9.7m, up 15.7% on the previous year.
Revenues from the company’s principal brand, the c150-strong Patisserie Valerie stood at £40.4m, up £5.5m or 15.7%, whilst revenues from its other brands, including Phillpotts and Druckers, were £15.9m, up £0.1m or 0.6%.
The company’s gross margin was 78.0% (2016: 78.3%), whilst EBITDA margin stood at 22.0% (2016: 21.1%)
The group said that performance in the six weeks after the period end had been good with a strong Easter period.
It said it was on track with its rollout programme and has some exciting new locations for the remainder of the year.
The group continues to target 20 new store openings per year and in the period to the date of its results announcement have opened 10 new stores, which it said were trading strongly, and two closures due to leases expiring. The openings are a mixture of counter and full menu offerings with locations ranging from high-streets, retail parks and concession arrangements.
In the prior year, it opened its first store in Belfast, Northern Ireland, and trading to date has been excellent. The store is fitted with a bakery to support at least a further 10 store openings. Following the success of the Belfast store, in the period the company opened one additional store at Castle Lane, Belfast.
It also opened its first International store in Blanchardstown, Republic of Ireland and the encouraging, albeit early, success in this market has highlighted to management that the brand has international potential.
Revenue from its website continues to grow with digital sales in the period of £1.6m, up £0.2m or 14.3% (2016: £1.4m). Its Cakeclub membership increased by 22,000 members in the period, up to 383,000, with an “ever-increasing social media following”.
The group invested £2.9m in new stores and £1.5m in refurbishment of its existing estate or additional bakery or fleet facilities during the year. It said that the return on investment from its stores remains strong with the majority of stores having a payback period of less than 24 months and the average remains 23 months.
Luke Johnson, executive chairman, said: “We have delivered another strong set of results with growth in both revenues and profit and excellent cash conversion despite the challenging market conditions and the current inflationary environment. We have opened 10 new stores including our first international store in the Republic of Ireland, and the pipeline to the end of the year to achieve our target of 20 new store openings is on track. With a strong balance sheet and an experienced management team, we remain operationally focused on the organic delivery and continue to assess acquisition opportunities. Accordingly I am confident of delivering a successful second half of the year and beyond.”
Costs
The company said that inflation on food costs was high, however, it isnow seeing prices stabilise with the majority of core ingredients now at normalised levels.
It said: “We have actively mitigated inflationary pressures resulting in only a minor impact of 0.3% on our gross profit margin which was 78.0% for the period (2016: 78.3%). We are continually working on our supply chain to ensure we buy at the best market prices and have fixed price contracts on a number of key lines. With further improvements in our supply chain and operational gearing from the growing group, we expect our gross margin to be broadly constant to the end of the year.
“Pay rates continue to increase from the impact of both National Minimum and National Living Wage. However, with more effective rostering in stores, as well as making some minor central changes, we have limited the impact of pay pressures whilst maintaining an excellent customer experience.
“Additional wage increases implemented in April 17 with the next stage of the National Living Wage increase will have an impact of approximately £0.5m on our wage bill. Again with more effective rostering and other areas of scale benefits that will come through in the second half of the year, we would hope to mitigate much of this increase.
“Other costs have remained relatively benign with no material rent increases and the change in Business Rates from April 2017 likely to be neutral across our nationwide estate.”
