Superdrug returns to profit but sales slip amid fierce competition

The health and beauty retailer posted pre-tax profit of £29m in the year to December 28, 2013, up from a £4m loss after exceptionals the previous year, in documents filed at Companies House. Turnover fell slightly to £1.01bn from £1.02bn the prior year.

But Superdrug’s gross margin increased to 40.1% from 39.2% the previous year.

Superdrug said a £15.1m exceptional charge relating to store leases pushed it into a loss in 2012. It has also been keeping control of costs. Superdrug estimated that the health and beauty market in 2013 was worth £13.1bn.

However, it said 2013 was a “difficult trading environment” and retailers in the health and beauty market were becoming “increasingly competitive”.
It added: “Growth was impacted by the continuing pressures on consumer income with reduced footfall on high streets, which was more significant outside of London.”

Peter Macnab, newly appointed managing director for AS Watson Health & Beauty UK, which owns Superdrug said: “The high street remains a challenging environment for all retailers, however, our sales momentum has been strong this year, we believe the plans we have put in place reflect our commitment and confidence in the future of UK retail.”

The retailer, which launched click-and-collect in the period, said it recognises the opportunity to grow its multichannel offer in the UK market where health and beauty online has “relatively low participation”.

Superdrug said it is investing in a ‘Customer 360’ multichannel strategy, making improvements to technology and it supply chain this year.

It has also been growing its healthcare offer in stores and launched a new healthcare store format in Banbury in May and today opens a new beauty format in Cardiff called Beauty Studio.

In the year to December 2013, Superdrug refitted 200 stores, bringing the total refit to 500. It said it will complete the three-year refit plan in the current year. It also launched its own brand cosmetics and skincare range B.