Booker Reports Strong Growth in Sales – What is the Impact of this on the Wholesale Market?

Booker last week reported good sales growth over the  quarter, with Non-Tobacco like-for-like sales up 3.1 percent for the quarter. Sales growth for all stores including the Makro stores was 0.1% up on the same period last year, for the 12 weeks to 12th September 2014 – a pretty solid result.

However, Makro endured a 10.8% decline in its sales for the quarter, as it disposed of its unprofitable categories.

Shares in the company were up 4.5% to 121.5pence on morning on trading after the announcement and continue to trade well at 123.55 pence by the end of last week (26th September).

What does this mean for the wholesale market as a whole? Has Booker taken share from the other wholesale players? Or is this the result of real growth in the market, as a result of more convenience stores being opened?

The number of convenience stores, bars, restaurants, kitchens and caterers in this country has largely stayed consistent at around 450,000. There hasn’t been significant growth in the number of convenience stores which is the largest customer base of Booker and the largest part of the market with approximately 250,000 independent convenience stores in the UK today. Thus, the growth comes largely as a result of an improved offering which existing customers find very attractive.

The Makro acquisition has added sales to the Booker group, as well as enhanced synergies from added purchasing power etc. However, as it was already a loss making business before the acquisition, there is still a lot to do by reducing the categories which are loss making e.g. electrical, fashion etc. and so we can expect to see further improvements in profitability over the coming quarters too. By focusing on their core customer group and market lines Booker will be able to improve the supply chains in those areas.

By consistently delivering high levels of customer service and competitive pricing levels of promotions on the key product lines, Booker looks set to continue its strong performance under the leadership of Charles Wilson, Booker CEO.