Superdrug & Savers: FY2019 and footfall driving plans

Date : 06 October 2020

Sabira Habib

Retail Analyst

Superdrug reported 1.6% growth in revenue and 12.4% increase in operating profit. Savers also reported an increase in revenue by 12.3% and a 7% increase in operating profit for the year ending 28th December 2019.

Superdrug’s ‘Solid performance in the period’

  • Revenue growth of 1.6% to £1,304mn (2018: £1,283mn)
  • Operating profit increased by 12.4% to £107mn (2018: £95.2mn)
  • 30 new stores opened while 35 stores closed in the period resulting in a total of 811 stores
  • 15 million members by the end of financial period. The growth was due to initiatives such as double points offers throughout the year, improved marketing communication, ‘member only’ pricing deals and the double points offered to Superdrug Mobile customers

It reported continued growth in its online channel, driven by sales from its website and Online Doctor service. The drugstore operator improved its online services by launching its 30 minutes ‘click and collect’ service in 2019 for quick order fulfilment and also improved user navigation on its mobile app to allow purchasing directly from phones.

Savers’ strong performance

  • Revenue increased by 12.3% to £569.7mn (2018: £507.2mn)
  • Operating profit increased by 7% to £54.8mn (2018: £51.2mn)
  • 55 new stores opened, and 4 stores closed resulting in a total of 492 stores at the end of the financial year

The discount health and beauty retailer continues to focus on providing competitively priced high-quality branded products across the health, home, and beauty categories. In 2019, it launched its transactional website, offering a limited range of products that could be delivered directly to customers’ homes.

Impact of COVID-19

The financial year does not cover the lockdown period, however, both Superdrug and Savers highlighted a drop in footfall during the first quarter of 2020. Superdrug reported 70% of its stores continued to trade during the lockdown whilst Savers continued operating approximately 85% of its locations.

However, the footfall decline was significant for both businesses with Superdrug reporting a 75% decline and Savers reporting 60% decline in footfall placing immense pressure on the businesses despite a significant increase in online trade. 

Both companies have reported taking ‘proactive steps’ to ensure the businesses can withstand the pressures in cashflow in case there is a second wave.

Plans to drive footfall  

Superdrug announced that along with its plans to continue to invest in store opening and refurbishment programmes it also looks to invest in new store technology. It works to attract footfall with more beauty and healthcare offerings both in-store and online and both businesses look to maintain a strong price perception on the high street.

The health and beauty operators acknowledge that the UK retail environment remains a challenge for the year ahead, navigating through the pandemic and preparing for Brexit. With a strong FY2019 performance and clear future strategies outlined will help the businesses to deliver further growth and withstand any downside scenarios. 

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