CJ Lang boosts profit by 8% and looks ahead with cautious optimism

Another annual increase in underlying profit has been reported by CJ Lang & Son – making this the seventh year in succession that SPAR Scotland’s wholesaler and retailer has achieved such growth.

Pre-tax profits increased by 8% to £4 million in the year to 28 April 2024 while turnover was up by 14.2% to £253 million.

Colin McLean: ‘We have achieved another year of strong sales and profits.’

With its focus firmly on profitable growth, the long-established family-owned business last year acquired 12 new company stores – the Scotfresh group of nine convenience stores along with three of the former Eddy’s Food Station shops.

All three Eddy’s stores, and seven of the nine Scotfresh stores, have already been converted to SPAR Scotland, and the remaining two shops – at Cardonald and Denny – will be relaunched in the next few months.

The company has also completed major store refits at Kilwinning, Lawthorn and Erskine in the last 12 months. It has introduced the exclusive Barista Coffee offer, together with digital screens and electronic shelf-edge labels (all company-owned stores will have them by Christmas), to help modernise the customer shopping experience.

In addition, CJ Lang’s head office in Dundee has undergone a refit, producing a more modern, relaxed environment.

Headed up by CEO Colin McLean, the company’s leadership team gave a progress report at the SPAR Scotland tradeshow and conference last month in Aviemore. This attracted almost 850 guests: store owners, managers and employees; colleagues from SPAR across the UK and internationally; and more than 200 suppliers.

McLean commented: “We have delivered robust growth over the last 12 months and achieved another year of strong sales and profits. However, this year the summer was against us.”

Despite a poor summer, CJ Lang has achieved 8% year-to-date sales growth, and its volume is up by around 3.5%. “We are significantly outperforming the total Scottish market in both sales and volume, and probably the UK market too,” said McLean.

Nevertheless, rising operational costs, combined with changing consumer habits and supply chain unpredictability, are critical factors that will shape the year ahead. “We are committed to working even harder to remain agile and proactive in addressing these issues,” he pledged.

The CJ’s food-to-go proposition is playing a key part in strengthening margins, as well as driving footfall into stores.

Following its Scotfresh and Eddy’s store acquisitions, CJ Lang is focused on consolidation and improving existing sites, but it has not ruled out further acquisitions.

“With market pressures – legislation coming, the decline of cigarettes, etc – I think you will be seeing quite a few retailers run for the exit door over the coming weeks and months. That represents an opportunity for us, but it’s got to be the right stores,” said McLean. “It’s about quality over quality, and trying to get that balance right.”

The company is about to embark on the second phase of its project to ‘take SPAR Scotland back to where it belongs’. There is still a target of hitting 30% as the overall retail margin – and SPAR Scotland is moving closer to this figure by enhancing the product mix in line with evolving shopper demands.

“The reality is that we have to be heading for 30% in order to sustain the cost pressures that have been with us, are still with us, and are still to come,” said CJ Lang’s chairman Jim Hepburn.

In SPAR Scotland stores that have a Barista Bar, volumes have gone up by about 25% versus Costa.

The CJ’s food-to-go proposition, along with the introduction of a Barista Bar in place of Costa Coffee machines, is playing a key part in strengthening margins, as well as driving footfall back into stores in the face of declining sales of cigarettes, newspapers and magazines.

A total of 125 SPAR Scotland stores (100 company-owned and 25 independent) will have a Barista Bar by Christmas. In those stores that already have a Barista Bar, coffee volumes have gone up by about 25% versus Costa.

In addition, a £2.99 breakfast deal of a Barista coffee and a bacon roll is proving popular with consumers – and represents a saving of around 50p on the previous breakfast promotion. The company has also just launched a lunchtime meal deal, offering a burger and a drink for £1.99.

CJ Lang is using data, AI and best practice from SPAR International and SPAR UK stores to get a better understanding of the customer and therefore offer the right product mix. “We are also looking at how we tailor it sensibly,” said McLean. “While some retailers are talking internationally about tailoring the product mix to individual stores, that’s a big challenge. It’s the right journey, but it’s a big challenge.”

CJ Lang has invested £30 million in SPAR Scotland in the past five years, and that doesn’t include investment in pricing and promotions. Although McLean and Hepburn would not divulge their current budget, Hepburn did say that the company is “continuing to invest probably twice as much as our nearest competitor in Scotland.”

McLean added: “As a genuinely Scottish family-owned business, we are well positioned to continue our journey to meet the needs and support of our customers with the best that SPAR Scotland can offer.”

He maintained that SPAR Scotland’s people give it a big advantage. “Our managers really have made a difference, and continue to do so. We’re not perfect but being 100% family owned we try to get the best of people feeling they’re part of the family and blend that with the best of corporate.

“As one of our managers said the other day, you’re a name, not a number. You are valued. We also have very visible management at all levels – for example, all the management team worked in stores over the summer and will be working in stores again between now and Christmas.”

McLean himself also feels supported in his role. “I’ve got a good team. I’ve got great support from the main board, and I think that’s very important at a time when things are challenging.”

With availability issues from some major suppliers, CJ Lang has had to increase its stockholding levels in order to protect its service to its own customers.

One of the challenges that CJ Lang continues to face is availability from some major suppliers. “Given our sales growth, given our volume growth, we are urging suppliers to give us the stock because we can sell it. We’ll work with them, share our data, but we want the right products at the right time,” said McLean.

With inbound service levels at 94% (compared to 97.5% pre-pandemic), CJ Lang has had to increase its stockholding levels in order to protect its service to its own customers.

To improve availability, the business has also been investing in vehicles, equipment, and systems and processes. RELEX Solutions is delivering integrated store and distribution centre forecasting and replenishment as well as providing improved allocations, promotional estimating, order accuracy and forecast sharing.

Elsewhere within the business, SPAR Scotland continues to invest in a programme of marketing, advertising and digital campaigns. It has an ongoing high-profile partnership with the Scottish FA, and on 17 October it will launch the SPAR ‘Big Deals of Christmas’ campaign backed by advertising on STV.

Looking to next year, McLean said: “As we move into 2025, we do so with cautious optimism. SPAR has proven repeatedly that we can overcome challenges – through collaboration, innovation, and strategic planning – to ensure continued success and growth. We aim to reinforce that spirit and look forward to what the future holds.”

• The 2025 SPAR Scotland tradeshow and conference will take place on 25 September in Aviemore.