Trading lift sees Crawshaw restart expansion

The Rotherham-based group, which trades from 20 butchery stores across Yorkshire, Nottinghamshire and Lincolnshire, was forced to halt growth plans last year as the recession hit.

But Richard Rose, Crawshaw's executive chairman, said the group hopes to add an extra two stores this year, after opening its last new store in May last year.

It opened seven new stores between July 2008 and May 2009, including sites in Castleford, Huddersfield, Doncaster and Bramley in Leeds.

"All the new stores are performing very well and are actually ahead of line so far this year," said Mr Rose. "Customers have reacted very well to the new stores. I'm now feeling confident enough to start the opening programme again."

Crawshaw is looking for sites in its northern heartland, but declined to identify targets. Of its new stores, the larger sites are performing best on all measures including margins and profits, so Crawshaw said it plans to continue rolling stores based on this model.

The group yesterday said total sales in the year to the end of January grew 18 per cent to 19m, but like-for-like sales fell eight per cent. Pre-tax profit was 193,000, compared with an 846,000 loss a year earlier.

"Customers' buying habits changed as a result of the recession," said Mr Rose. "They started to move into cheaper products. We had to re-profile our stock.

"Sales of the expensive lines like sirloin steak fell and the better value lines like chicken, sausages, burgers and pork rose.

"They bought cheaper products and walked away with more. That meant the frequency they visited the store was down a little bit. We reflected the new buying habits of the consumer in the stock profile but of course we had to spend some time doing that."

After seeing weak margins early in 2009, the stock changes helped strengthen gross margins "very considerably" by the fourth quarter of its financial year.

Crawshaw also revamped its customer service and used sales promotions. It also developed its delicatessen and hot food offer, all of which has boosted trading, with operating profit in February and March significantly ahead of a year earlier.

"It feels much healthier this last few months," said Mr Rose. "Consumers are perhaps getting used to the recession and they are starting to feel much more confident about treating themselves again."

The group, which has processing and distribution centres in Rotherham and Grimsby, saw operating costs rise 30 per cent over the year thanks to its larger store footprint and higher group costs. But Crawshaw said it is managing costs well with like-for-like wages, fuel, telecoms and stationery all lower than a year ago.

It generated about 600,000 cash over the year, double a year earlier. It also raised 1.9m of new share capital, and the money was used to pay for new stores and repay loans.

Crawshaw finished the year with net debt of 0.9m compared with 2.7m a year ago. The group does not plan to pay a dividend.

Leeds-based analyst John Cummins, at house brokers WH Ireland, said: "The new financial year has started well, with both new and older stores alike trading ahead of budget, which could lead to an increases in our estimates at some point later this year if the trend continues... We view Crawshaw as a fundamentally sound business with good growth prospects."

From kiosks to butchers

Crawshaw Group has come a long was from its early days as a digital kiosk business.

It started life in 2001 as a sales promotion business and in 2004 the company bought Felix Corporation and changed its name to Felix Group plc, floating on AIM.

Between 2004 and July 2007 it raised about 17.2m to develop its products. It launched Max Box, a range of kiosks offering digital and media products.

But the kiosks business flopped, and in 2007 its trading arm, Felix Corpora-tion, was put into adminis-tration and taken private.

With Felix left as solely an investment shell, it began looking for acquisitions.

In March 2008 Felix annou-nced a reverse takeover of Crawshaw Butchers, a chain of 14 shops, by issuing shares worth 11.7m.