The A.S. Watson-owned Superdrug and Savers chains both delivered profit and sales gains last year despite a “challenging period” in the retail sector due to the restrictions related to the pandemic.
Newly filed accounts covering the 53 weeks to 1 January 2022 show revenue at Superdrug increased 5.1% to £1.17bn, bolstered slightly by the inclusion of a 53rd week in the company’s financial period.
The health & beauty retailer noted that its revenue had declined by 29% in the first quarter of the year when a lockdown was in place. Trading then improved during the rest of the year as restrictions were eased, although the run-up to Christmas was impacted by the arrival of the Omicron variant.
Superdrug’s pre-tax profit jumped 141.3% to £45.3m as footfall returned to its stores during the year. Operating margin climbed from 3.2% to 5.1% after the previous year was impacted by an impairment provision of £10.7m.
Despite the disruption from the pandemic, Superdrug continued to invest in new stores, with 14 opening in 2021. The company also closed 18 outlets, resulting in a trading estate of 798 stores at the end of the financial period.
Superdrug’s e-commerce operation also continued its strong growth, with online sales up 48.5% compared to 2019 pre-pandemic levels. The retailer introduced several new delivery options for customers, such as ‘Store to Door’ and two-hour rapid home delivery.
The company also noted that sales of its own-brand products (and lines exclusive to Superdrug) continued to grow, providing it with a point of difference over its rivals.
Commenting on current trading, Superdrug’s CEO Peter Macnab said: “The inflationary environment started by the Covid-19 pandemic has now been accelerated by the Ukraine crisis and we see significant pressure on retail’s operating margins, as well as reduced consumer confidence and disposable income. We are working hard to support our customers through these challenging times and doing what we can to minimise the impact of price rises, as we stand firm in our mission to bring the very best of accessible health and beauty to the high street.”
He added: “Although we expect the UK retail environment to remain challenging, the resilience of our online and healthcare channels, coupled with our clear future strategy to operate in both the Offline and Online channels, focus on our cost base, and drive efficiencies that can be invested in improving our customer and colleague offering, leaves us well-positioned to grow successfully in 2022 and beyond.”
Meanwhile, it was a similar picture at Superdrug’s value-oriented sister chain Savers. Over the same period, its revenue increased 5.8% to £567.2m as trade picked up during the year.
Pre-tax profit edged up from £40.3m to £40.4m. However, its operating margin fell from 8.3% to 7.8% due to the impact of cost inflation across its operations.
Savers opened 23 new stores, and closed 10, ending the year with 519 outlets. Its e-commerce operation also saw strong growth, with sales up 21%.
Last week, trading figures from Boots confirmed the chain was continuing its recovery from the effects of the pandemic, aided by its ongoing transformation programme.
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