The Bestway Wholesale accounts for the year ending June 2019 have been published and reveal the full extent of the ‘underperformance’ described by group chief executive Lord Zameer Choudrey.
The Wholesale division, which is made up of Bestway Wholesale, Bestway Northern and Batleys Properties, saw its revenues remain flat at just under £2 billion. The 2019 figures include a full year against six months in 2018 for the Bestway Vans Direct business, estimated at £44 million versus £12 million.
Operating profit fell from £26.1 million in 2018 to £14.4 million, while profit before tax declined from £23.1 million to £8.7 million.
The accounts also point to a significant margin loss. The company commented that it made significant investment in “moving deliveries to 23 hubs which are now providing greater efficiency and improved pick accuracy for retailers and caterers; however, the company did endure one-off migration costs. The increase in delivery also meant that the company increased its bad debt provision along with prudent practices.”
Following the acquisition of the former Blakemore depot in Cardiff, Bestway closed two other sites in the same city “to drive efficiency”.
It also shut its Perth depot as part of the Hub project as a result of low footfall; however, it kept its national Advice Centre team on the site and has retained the depot space should it need the capacity in future.
“In fact, we even considered opening the depot during the Coronavirus outbreak to help service local people, but this was deemed unnecessary as local sites were able to service these customers,” said managing director Dawood Pervez. “We did reopen one of the Cardiff sites to take in volume of toilet paper from the nearby manufacturer.”
Speculation that Bestway may at some stage lease some of its less profitable depots – as the pure rental may be more profitable than the going concern – was dismissed by Pervez: “For as long as it makes sense to retain a depot to serve our customers [independent retailers, petcare customers and caterers] and keep our colleagues in employment, we have no plans to change the purpose of these locations.
“Furthermore, our acquisition of two former Blakemore sites and the former Conviviality Retail business, and our setting up of Bestway Vans Direct, shows our continued commitment to build the best reach.”
In better news from the accounts, Bestway’s catering sales grew by 2.5% to £162 million, weekly online sales were up by 12% with 81,000 registered users against 62,000 previously, and Symbol sales increased by 3%.
However, Bestway Retail, which is a separate entity including the acquired Bargain Booze and Central Convenience Stores, lost £5.5 million despite revenues of £379 million. “We were unable to carry out due diligence when we stepped in to save this route to market from administration, and many hidden liabilities have come to light,” said Pervez. “However, we have stabilised the business and have worked through the majority of issues.”
Lord Zameer Choudrey added: “Bestway Wholesale has been impacted by the time taken to turn around Bestway Retail – a previously loss-making business (Conviviality Retail) that was bought out of administration in the prior year.
“This is against the backdrop of a difficult wholesale environment. Trading conditions remain difficult due to the ongoing competition from the grocers, increased national living wage, as well as the impact of Brexit on our supplier partners.”
Since Pervez took the helm of the business he has reshuffled the senior team to ensure that the business is “lean and fighting fit”. MD Martin Race – who was praised by Choudrey for ‘successfully overseeing the business’s return to strong profitable growth’ – left the company, as well as several other key executives including development director James Hall, sales director Tony Holmes, and director of trading for retail and own-label Ed Seaton. Steve Carter, director of trading for fresh and catering, is another recent high-profile exit.
Pervez commented: “As the market is fragmented into price-led collect wholesalers and service-led delivered wholesalers, we are setting ourselves up to win.
“Bestway continues to be the leading light of independent wholesale against a tough economic backdrop, which is only set to become tougher due to sustained social distancing measures and the detrimental effect this will have on the foodservice industry further into the year, and the economic impact of job losses and business closures due to COVID-19.
“We are confident that our 2019/20 results will show growth versus last year. This will be down to our continued focus on our core customers and our ability to meet the demands of our customers throughout this unprecedented period where the local retailer has become the beating heart of so many communities.
“We continue to campaign to achieve fair availability from our suppliers alongside the multiples who are unable to offer the same local service that our retailers can.”
Tel: Bestway Wholesale 020-8453 1234