Wage inflation hit Warrens Bakery profits hard in its latest financial year, although sales were up by 6% compared to the previous period.
The retail chain, which has its head office in Helston in southwest Cornwall, reported turnover of £14.8m in a filing to Companies House for the year ended 30 June 2024. This was a £862k improvement on its FY23 revenue and marked continued year-on-year growth, having reported a 10% increase in turnover last time around.
New stores were opened in Barnstaple, Dartmouth, Bath Spa, and Basingstoke railway stations during the period, while four loss-making stores were closed as their leases expired. It also rolled out a digital rewards app.
Gross margins improved slightly to 59.6%, but Warrens reported that higher overheads – mainly due to wage inflation – had resulted in a significant reduction in profitability. It ended the year in the black by £190k, well down from the £459K profit recorded in FY23.
Warrens Bakery chairman Mark Sullivan noted that the company was steadily expanding its revenue base, despite the challenging economic climate, whilst transitioning to a new geographic format.
“Over the past 18 to 24 months, the business has undergone a strategic realignment, placing greater emphasis on ‘institutional and travel’ locations,” he commented. “This has included optimising the ‘town and country’ estate by closing underperforming legacy stores and launching new sites.”
Since the end of its latest financial year, Warrens has opened new shops in Yelverton, Newquay, Slough, and most recently at Cardiff Central train station. Its retail estate currently stands at 42 and spanning the West Country, the Southeast of England, and South Wales.
“While these developments, alongside closure-related dilapidation costs, have impacted short-term profitability, they underscore the company’s commitment to long-term growth,” added Sullivan. He also revealed that Warrens was in the final stages of securing a successful bank refinancing arrangement, transitioning to a revolving credit facility.
Margins have continued to improve going into FY25, with profit for the year forecast to increase.
In addition, the chairman confirmed that plans were afoot to pursue further geographic expansion, including potential partnerships, to extend the brand’s presence nationally. “Warrens Bakery is at an exciting point in its journey,” he enthused. “We now have a brand format that combines our unique heritage with a fast-moving food-to-go concept, ideal for high footfall locations, so growth plans are taking shape rapidly”.
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