Premier Foods has praised its Mr Kipling relaunch as “delivering encouraging share gains” as it revealed an underlying sales decline of 4.7% in the third quarter.
Branded sales have also fallen by 4.1% and power brands were down by 5.1%, although they showed an improving trend towards the end of the quarter. Support brands, including Homepride and Cadbury cake, “performed well”.
The company said gross margins remained solid following a move away from loss-making promotions, while return on investment from other promotional activity was higher than last year.
During the quarter to 30 September 2014, the Mr Kipling brand underwent a major relaunch, including an extensive advertising campaign, new packaging, targeted social media and in-store marketing initiatives. As a result, Mr Kipling’s sales grew in the quarter and achieved market share gains.
However, trading profit projections for the 12 months to December 2014 are “towards the lower end of market expectations” said the company.
Gavin Darby, chief executive of Premier Foods, said: “Market conditions in the third quarter have proved to be increasingly demanding with unprecedented structural changes across the industry gathering pace. In response to this changing environment, we have put in place a new business unit structure with new leaders to reinforce our category-based strategy and improve our agility, focus and accountability.
“The initial response to the relaunch of our biggest brand, Mr Kipling, has been encouraging and we are implementing a strong programme of new product introductions and consumer marketing in the fourth quarter of the year to coincide with the important Christmas trading period.
"We continue to invest in our brands and strengthen our customer partnerships, while retaining a tight focus on managing costs, the delivery of trading profit and organic de-leveraging. I believe this balanced approach is central to creating value.”