Wilko has reported falling turnover but a return to profits in its latest financial year.
The general value retailer this week reported turnover of £1.6bn in its 2019 year, down by 2.3% compared to the previous year. But at the bottom line it was back in the black, reporting pre-tax profits of £34.8m, compared to a pre-tax loss of £65m the previous year.
During the year, the retailer, ranked Leading in IRUK Top500 research, opened eight shops and closed seven to take its total store estate to 416.
More than half of its sales came from its own brand products (54.7%), up from 52.7% in 2018, as the privately-owned family business continued a strategy of transformation into a product-led business. As part of that, it hired chief financial officer Alex Russo from the same role at Asda, while Andrew Moore also joined from Asda, where he was chief merchandising officer and senior vice president, to take up the role of chief commercial officer.
“We have focused this past year on controlling margin, costs and cash, helping us to return to profitability,” said Russo. “While the retail environment remains challenging, we are pleased to see the popularity of our own brand products continue to rise. The coming year will see us focus on continuing to improve the customer proposition and drive further operational efficiencies. We want to ensure product is at the centre of everything we do so that we can continue to free up hardworking families to be the best they can be, through offering great products at affordable prices.”
Hannah Thomson, senior retail analyst at GlobalData www.globaldata.com, said: “Wilko is emerging from another turbulent year – one full of senior management changes – in which it suffered a £63.4m dip in UK sales to £1.555.7m. The retail attributed this underwhelming performance to the challenging retail environment and last year’s 53 week comparative, but on a sales per week basis FY18/19 still underperformed with sales per week falling 2.1% compared with the previous year. However, in spite o this, Wilko has returned to profitability, delivering an increase of £99.8m in pre-tax profits, citing improvements in cost control.”
She said that the retailer continued to be threatened by rival value general merchandise retailers B&M and The Range, both focusing on larger format stores. But she said that Wilko needed to focus on growing sales online to differentiate itself from B&M. “Up against tough comparatives, online sales were flat for FY18/19, but as online penetration increases across al retail sectors, Wilko will face the same challenge as many on the high street – that delivering growth online will be vital to offset declining store sales.”
The first Wilko store opened in 1930 and today the retailer sells from 416 stores and online at wilko.com.
Image: Screenshot of Wilko.com. InternetRetailng Media