Superdrug posts 16% profit rise in 2017

Superdrug, part of the AS Watson Group, has posted a pre-tax profit for 2017 of £92.9m, an increase of 16% from the pre-tax profit of £80.4m reported for 2016. This represented a strong performance since the 2016 profit was bolstered by the inclusion of a 53rd week in the company’s financial period.

Revenue for the period was £1,242 million (2016: £1,214 million), an increase of 2.3%, driven by sales from like for like stores which increased by 2.5% and the benefit of 22 new UK stores opened in the period. This strong LFL sales growth is on top of the 7.8% recorded in 2016 showing the company’s continued growth momentum.

Sales growth was driven from all categories. Superdrug increased its market share of cosmetics to 32%, driven by the introduction of new brands such as Revolution which is a leading social media inspired brand. Skincare grew by 10% over the year with face masks being a standout hit with sheet-masks and bubble-masks being snapped up for social media mask-selfies. 2017 also saw Superdrug sponsor the summer TV hit Love Island which saw sales boosted in key areas including bronzing, makeup and hair styling, with the company continuing with its sponsorship of the ITV show this summer.

Healthcare and wellbeing also grew strongly at eight per cent, supported by strong performances across wellbeing categories including smoking cessation and vitamins, plus the continued growth of the Online Doctor business which dispenses products direct to customers’ doors or nearby stores. The company’s pharmacy business celebrated its 25th anniversary in 2017, and continues to be an important part of the customer offering, with over 200 pharmacies across the UK. In November, the company launched its electronic NHS prescription service, allowing customers to have their prescriptions delivered directly to their homes for free. continued to perform strongly with sales increasing by over 30%. Improved website functionality, including a new mobile app, and increased delivery solutions for customers, helped drive this continued growth. October saw the service extended to Sweden, Finland and Denmark.

The Health & Beautycard membership programme continues to perform well. The proportion of sales from members increased from the previous period, supported by benefits such as double points offers throughout the year, improved marketing communication to members, and ‘member only’ pricing deals. The programme has increased in size by 25% over the last year and stood at nearly 12 million registered customers at the year end.

A new launch for Health & Beautycard members in 2018 sees them offered a great value SIM only mobile phone network, Superdrug Mobile, with no contract, and the benefit of double points on all their shopping with Superdrug, giving them more opportunities to spend and save.

Superdrug continued its capital expenditure programme, spending £31m in 2017. The majority of the investment supported the new store growth and refurbishment programme, but with an increasing spend on digital IT capability.  A refurbishment programme of the existing estate saw new makeup merchandise display units rolled out, along with similar concepts for skincare and fragrance, providing an environment which makes it easier for customers to shop, and for colleagues to replenish. The company also extended its wellbeing store format to 58 stores. Superdrug had 804 stores in UK and Ireland at the year end.

Delivering excellent customer service as well as a modern store environment remains a key part of the business’s focus, and Superdrug was delighted to be named fourth in The Institute of Customer Service Customer Satisfaction Survey results for the year (published in January 2018).

The year also saw more stores offering beauty services including 26 new Brow Bars and 27 new Nail Bars bringing the total to 284 and 56 respectively.  In addition, new services were launched including ten stores providing Ear Piercing and seven stores offering Waxing.  Superdrug is now the UK’s largest Brow Bar and Nail Bar operator, painting thousands of nails, and shaping thousands of eyebrows every week.

Peter Macnab, CEO of AS Watson Health & Beauty UK, comments: “We are pleased with the company’s performance, and the continued recognition of our colleague’s customer service efforts. I’d like to thank every team member for their hard work and contribution to these results.

“This year we will continue to focus on offering customers the service and products they want, including our new Superdrug Mobile. Our strategy this year is to ensure we are offering customers everyday accessible health and beauty, giving them the beauty and health services they need in a vibrant and friendly store environment.”