Booker Group achieved sluggish sales growth with its overall sales volumes have fallen year-on-year, reflecting wider challenges in the independent convenience sector.
Tesco’s preliminary results for the year ending 28 January show a 2.2% rise in Booker’s core retail sales and a similar increase in catering, nearly completely offset by a near double-digit drop in tobacco sales. Overall, the wholesaler reported 0.2% sales growth to £9.04bn.
Asked by our sister website Better Retailing about the contrast between Booker’s stalled sales and Tesco’s more than 4% sales rise, Tesco chief executive Ken Murphy said he was “hoping the sun will shine soon” for its wholesale arm.
He added: “Booker’s done well because it is able to service the best catering and retail customers in the market.” Murphy highlighted the performance of its Premier, Londis and Budgens symbol groups, which he said are “outgrowing the rest of the market”.
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The rate of tobacco sales decline at Booker is accelerating. Last year, the wholesaler saw an 8.8% drop, compared with 9.5% this year. While challenging, the drag of tobacco on Booker’s sales is not unique, with rivals Bestway and Co-op reporting a similar picture. However, low margins in the category mean dramatic revenue drops have a smaller impact on wholesalers’ bottom lines.
More positively, the 2.2% rise in retail sales excluding tobacco is an improvement on last year’s 0.9% growth in this metric. While Tesco said Booker’s sales and cost savings “more than offset operating cost inflation”, new cost pressures facing businesses make compensating for falling tobacco sales even more important.
Murphy acknowledged the trend, but insisted the business is adapting. He told Better Retailing: “Booker has progressively moved more and more into fresh food, and I think that’s going to be a source of gold for them this year.”
