Food and drink wholesaler JW Filshill has attributed strong cost controls, a targeted strategy to offset the decline in tobacco sales and the impact made by its international craft beer and spirits business for an increase in both margin and turnover in its latest financial year.
Glasgow-based Filshill, one of Scotland’s oldest independent food and drink wholesalers which supplies 183 KeyStore convenience stores across Scotland and the north of England, saw turnover increase 1.9% to £145 million in the year ending January 31, 2018, up from £142m the previous year.
Trading in an independent retail sector that remains “highly competitive” and despite Filshill’s strong performance in its food and drink business, operating profit dipped as the firm incurred higher overheads as it diversified its product mix to offset the continuing decline in the tobacco market.
Simon Hannah, managing director of the fifth-generation family business, said the group had delivered constant growth throughout the year in a market that remains challenging. “Consolidation in the sector is fast,” he said. “However, we are well positioned to continue to take advantage of the opportunities we are creating and deliver growth.
“Turnover, when compared to the previous year after adjusting for the continuing market-wide decline in tobacco revenue, showed adjusted growth of 6.7%,” Hannah continued. “The strong performance in non-tobacco categories including soft drinks, grocery, food to go and fresh and chilled foods, and this change in the mix of business, helped to drive up gross margin, with the uplift during the year 6.6%.”
Export sales via JW Filshill International, Asia-Pacific in particular, continued to grow and Mr Hannah said that this business is now “contributing profitably” to the group.
Pointing to cost control as a key focus of the business, he added: “Recent changes to the living wage, pension regulation and fuel prices continue to drive up our cost base but we continue to focus on offsetting these increases through a constant drive in improving operational efficiency and maximising our use of technology and data.
“We’re in a strong position given current market conditions and while changing the mix of our business has led to increased overheads, we are prepared to incur these costs in order to ensure that our customers have the armoury they need to compete in the increasingly competitive convenience retail marketplace.”
Hannah added that investment in Filshill’s workforce was key and additional resource in the operations, customer service and marketing departments had enabled the firm to engage more closely with its customers by offering market-leading service, strong promotions and wide-ranging advice and support, including store layouts/planograms, consumer leaflets, digital social media and Epos till installations.”
Pointing to Filshill’s strong balance sheet, showing current net assets of £9.8m, he said: “We are pleased with the company performance and are confident that profits will continue at a satisfactory level, with the current year’s revenue showing further strong growth. The independent retail trade remains highly competitive and challenging and we seek to manage the principal risk of losing customers by aiming to deliver best-in-class customer service.”
Maintaining strong partnership-based relationships with suppliers was also a key strategy for the company, Hannah said, pointing out that Filshill was recently ranked number one by suppliers in an independent survey across its key competitors.
During the year the company implemented a number of energy-saving and recycling initiatives, and continued to support many local community programmes and good causes as part of its ongoing commitment to CSR.