SuperGroup to open new Burton-on-Trent fulfilment centre to keep apace with growing sales

The 500,000 sq ft distribution centre in Burton-on-Trent will “support the Group’s growth aspirations in its next phase of development”.  It will be in full operation towards the end of financial year 2014.

The retailer’s existing distribution capacity at Gloucester Park and Barnwood will continue to operate while the new facility is being developed.

This new facility will “support planned growth for at least the next five years”, SuperGroup said.

SuperGroup added: “After the initial set-up and transition phase this investment will deliver an opportunity for the Group to generate significant cost savings and improve operating margins.”

Underlying pretax profit for financial year 2013 will not be affected by this investment, SuperGroup said.

SuperGroup chief executive Julian Dunkerton said: “This investment marks SuperGroup moving into the next major phase of development and equipping itself to meet its increasing sales ambition.

“Ideally located, SuperGroup will have a highly efficient UK distribution centre, enabling the Group to generate both financial and operational benefits and provide a platform for us to meet the increasing demands of e-fulfilment.”

The retailer acknowledged in December that while its existing retail distribution configuration was “fit for purpose for the immediate future, [it] is an operation with sub-optimal cost structures and is inadequate to support medium to long-term capacity requirements”.

SuperGroup has entered into a long-term agreement with Clipper Logistics to provide an “on-going operational solution for the fulfilment of the Group’s multichannel retail activities”.

The retailer said Burton-on-Trent is “ideally located for national carrier networks to supply the Group’s retail outlets more efficiently and to support fulfilment of the Group’s internet operations both in the UK and internationally”.

The retailer has suffered in recent years to adequately develop its supply chain alongside its growing turnover. In 2011, an IT glitch that affected a new warehouse system wiped £9m off SuperGroup’s earnings.

Oriel analyst Jonathan Pritchard said: “SuperGroup’s logistical frailty was shown up in 2011, when distribution problems caused the company to lose sales and PBT. The existing logistics are simply not fit for the expected demand ahead so an urgent solution was required.

“It will take until this time next year for the centre to become fully functional, but it should then be able to cope with store and multichannel demand for the balance of the decade.

“Some potential investors are put off by the hiccup in 2011 but this move should begin to move the investment case even further forward. We can’t possibly argue that everything is sure to go without a hitch (many retail distribution handovers have met problems) but with a new head of logistics set to be named soon, bringing this issue to a conclusion is a positive for SuperGroup.”