Jul 2, 2019
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Savers beats sister chain Superdrug's growth despite tough market

Jul 2, 2019

Savers, the AS Watson-owned chain that is a sister to health & beauty retailer Superdrug, has made the most of its discount focus and its own strong beauty offer and managed to outstrip Superdrug’s growth in fiscal 2018.

The Savers chain has been opening new stores

Its revenue rose by £46.9 million, or over 10%, to £507.2 million, easily beating the 3.3% growth that Superdrug achieved in the same period.

That growth came on the back of its dynamic store opening/store conversion programme (with some Superdrug branches converted to the Savers chain) and it added 33 locations, taking its total up to 441 branches.

However, the company didn’t provide a like-for-like sales figure, even though it did so for the previous year’s accounts (LfL sales rose 4.8% in FY 2017), perhaps suggesting that comparable growth was slower, although we know that it didn’t turn negative.

Operating profit rose 10.1% to £51.2 million even though the company said that the UK health & beauty market remained challenging last year.

The company has been working hard to boost the appeal of its existing stores and has a continuing refurbishment programme under way.

Back with the headline growth figure, the retailer managed to beat the wider health & beauty market in the UK, which grew 3% last year. 

But analysts said the firm can’t rest on its laurels as it still faces a hugely competitive market in the UK. 

Pippa Stephens, Retail Analyst at GlobalData, said: “There is growing competition at the value end of the market, with rivals such as B&M also expanding their store networks to reach more shoppers. While Savers should continue to seek out its own physical expansion opportunities, it must also invest in driving a point of difference from these competitors. It can do this by launching exclusive product ranges or investing in more celebrity endorsements, as it has previously done with social media influencer Mrs Hinch.”

She added that the launch of the chain’s online shop last month, gives it “a competitive advantage over the likes of B&M and Poundland, and finally enables it to tap into the lucrative online channel, in which spend is forecast to rise 11.6% in 2019 alone. Range expansion is a must however, as it currently only provides a selected offer. It should also introduce a click & collect service, to drive store footfall and to ensure its delivery options are competitive with the likes of Wilko.”

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