Profitability at Morrisons’ Rathbones bakery remains challenged, the retailer has stated, despite the business reporting a £668,000 profit last year.
The retailer’s 28,000 sq ft manufacturing site in Wakefield was saved from closure in January. The business had been in the red for years, making a loss after tax of £2.2m in 2023 and £1.4m in 2022.
Rather than close the site, Morrisons opted to cease production of traditional sliced bread at Rathbones to focus on baking specialist products such as crumpets, pancakes, naans, and pittas. This resulted in the workforce being cut from 378 staff to 138.
At the time, Morrisons said Rathbones was projected to remain loss-making until 2027.
However, accounts filed at Companies House last week revealed Rathbone Kear Ltd had made a £668,000 profit after tax in the year ending 27 October 2024. The reported profit is, however, the result of a change in the way the bakery’s accounts have been compiled.
The accounts explain Morrisons has previously managed its manufacturing business using a cost-centre model, with goods transferred between the manufacturing and retail operations at cost plus a standard margin. The retailer is moving to a profit-centre model in future, which means some of the costs in the Rathbones accounts for 2024 have been reclassified compared to previous years.
A Morrisons spokesperson told British Baker that accounts for its companies are prepared in accordance with UK accounting standards, which require some adjustments to underlying management account information in order to reflect these accounting standards.
“This includes adjustments to reflect the ongoing transition to an internal ‘profit centre’ model as described in the directors report,” they added. “The underlying profitability of the bakery remains challenged and is something management continue to focus on.”
The accounts also state that Rathbones is expected to continue operating for the foreseeable future.
Morrisons rescued Rathbones from administration in 2005, and two years later acquired the whole of the business by buying out the 20% stake still owned by entrepreneur Harry Kear. In 2016, a major fire devastated the dry goods store, warehouse, and pitta production line in Wakefield, requiring two full years to fully reopen.
Rathbones is now part of the supermarket’s Myton Food Group, which runs 18 manufacturing sites across England, Wales and Scotland.
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