Premier Foods’s sales hit by weather and promotions

20-Jul-2017 - Last updated on 21-Jul-2017 at 11:17 GMT

Premier Foods reported a 3.1% sales fall

Premier Foods reported a 3.1% drop in sales in its first-quarter trading update, as desserts sales were hit by warm weather and changes to promotions.

The Mr Kipling owner’s branded sales fell 5.4% in the 13 weeks to July 1, while non-branded sales were up 11.3%. Sales volumes decreased over the period, due to lower promotional effectiveness – particularly in the desserts category – and a warmer June.

Premier Foods ceo Gavin Darby said: “Our first-quarter sales were lower than last year, as we expected, primarily due to lower sales volumes in the grocery categories, notably desserts.

‘Outperform our markets’

“At the retail level we have continued to outperform our markets and industry peers, our international business grew 20% in the quarter, and our cost savings programmes are on track.”

The manufacturer gained market share in Bisto, Batchelors, Lloyd Grossman, Mr Kipling and Cadbury cakes during the 13 weeks, it said. It expected these market gains to boost sales in the second half of the year.

The Batchelors brand recorded its second consecutive quarter of increased sales. Sales had previously been declining for three years, at an average of 6%.

Premier Food results – at a glance

Total sales down 3.1%
Branded sales down 5.4%
Non-branded sales up 11.3%

The Sweet Treats division reported a sales rise of 3.8% across the quarter, benefitting from continued sales growth from Cadbury cakes. Premier Foods was now expanding its cake-on-the-go range by introducing Mr Kipling flapjacks.

Eleventh successive quarter of growth

Premier’s International business recorded its 11^thsuccessive quarter of growth, after posting a sales rise of 20%. Cadbury cakes became more popular in Australia over the 13 weeks, while volume sales and market share also rose.

The manufacturer’s cost efficiency scheme was progressing well, it reported. It expected to deliver savings of £10M this financial year after consolidating its warehousing and distribution operations into one central location in Tamworth.

Sales were in-line with board expectations, and the group remained confident of delivering growth in the second quarter. It expected sales to be flat after the first half.

Darby said: “We expect to report positive sales growth in the second quarter, broadly flat sales in the first half and our expectations to deliver progress in the full year are unchanged.”