Patisserie Holdings reveals plans to boost production

Patisserie Valerie owner Patisserie Holdings is looking at options to increase production, including a manufacturing site in Manchester and in-store baking of morning goods.

The business, which today (27 November) announced a 9.7% hike in revenue to £114.2m in its preliminary results for the 12 months ended 30 September 2017, said it was reviewing production and logistics options as its geographical spread extends.

It has increased its total store numbers from 184 to 199 in the past year, and is aiming to open 20 new stores in 2018. In the past year it has opened in 12 new geographical locations.

While the openings were mainly in high-street locations and retail parks, the business has also developed a partnership with Debenhams and opened a store at St Pancras station. It has opened its first store under the Philpotts brand, a premium sandwich and salad retailer acquired by the business in 2014.

In a new tie-up with Sainsbury’s, Patisserie Holdings is supplying the retailer with branded Patisserie Valerie products sold from in-store counters. It was trading from 18 Sainsbury’s counters by the year end.

Patisserie Holdings opened its first Northern Ireland store in Belfast last year and reported that, following a strong performance, has opened a second Northern Irish store and its first and second international stores in the Republic of Ireland.

“All of these stores have been well received by our new customers and are performing ahead of expectations,” stated the company. “These openings give management confidence that the brand has international appeal and expansion potential.”

Patisserie Holdings currently supplies its stores from a main bakery in Birmingham and from seven satellite bakeries across the UK.

The company explained that, although it has excess capacity in its bakeries, it is to review how best to serve its estate from a production and logistical standpoint as its geographical footprint expands.

“We are currently reviewing options for an additional production facility in the Manchester area, with capacity to serve approximately 70 stores, as well as in-store baking of morning goods from within all of our stores,” it added. “Both of these initiatives will provide additional capacity to the group, as well as releasing savings and efficiency and improving product quality.”

The Patisserie Valerie brand accounted for £84.3m of group revenue, and rose 14.1% year on year. Revenue from the group’s other brands fell 1.3% due to two store closures. Group EBITDA was up 15.7% year on year to £25.6m, with profit before tax up 17.1% to £20.2m.

Online sales had risen 26% to £4.8m, and had been boosted by increased social media presence for the business, with Facebook followers more than doubling to 140,000, and “pleasing growth” on Twitter and Instagram.

The company said rising ingredients costs in the first half of the year had returned to normal levels in the second half. It added that, although the inflationary environment appeared to be easing, it was “remaining alert” to any pricing pressures.

“We have delivered another year of excellent financial results, achieving our targets in a challenging environment,” said executive chairman Luke Johnson.

“We opened 20 new stores, many of which are performing ahead of expectations, and the performance of our new bakeries in the Republic of Ireland is encouraging. Our indulgent, affordable treats remain attractive to customers, and our flexible business model has enabled us to mitigate inflationary cost pressures.”

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