SandpiperCI’s underlying profits hit by inflation

Monday 22 May 2023

One of Jersey's largest retail groups – responsible for the island's Morrisons, M&S, Iceland, and Costa stores – saw underlying profits fall last year as inflation hit distribution and staff costs.

SandpiperCI, which operates retail outlets in the Channel Islands, Isle of Man and Gibraltar, saw sales increase in the year ending January 2023 by 3.6% to £218.2m. following 5% growth the year before.

This was driven by a particularly strong performance in its M&S stores and a full year of ownership of the Red restaurants group.

“Our three-year (pre-pandemic) food like-for-like sales grew by just under 12%, clearly showing we have grown market share which reflects our continued focus on mitigating significant cost price pressure, to offer our customers the best possible values we can in these times of unprecedented cost price inflation,” said executive chairman, Tony O’Neill.

“Internally, we made our biggest ever investment in pay to ensure we attract and retain the best talent available in a shrinking labour pool.

“We also faced double-digit increases in our distribution costs, which form such a substantial part of our cost base. In spite of our efforts to mitigate these impacts, our trading EBITDA at £11.7m, fell by £1.0m year on year, a decrease of 8.2%.”

Pictured: SandpiperCI's executive chairman, Tony O’Neill.

Earnings Before Interest, Taxes, Depreciation, and Amortisation [EBITDA] is a metric used to evaluate a company's operating performance.

Operating profit was £7.1m compared to £8m the year before.

“Inevitably, with inflation still in double digits, the outlook is uncertain,” he said.

“On the positive side, current sales performance is exceeding our expectations and prices are starting to moderate. Our challenge remains continuing to grow our sales ahead of our cost base. As an island-based business with a finite market, ongoing inflation inevitably creates further cost pressures, particularly on labour and distribution.”

Sandpiper announced last year that it was developing franchise stores in partnership with M&S in the UK.

“We are still in the early stages of this long-term project but encouragingly we expect to open our first two stores by autumn of this year.”

On 3 March the Group completed the acquisition of the remaining 30% of the ordinary share capital of Big Red Limited for £481,813.

Three days later it disposed of 75% of its shareholding in the holding company of Big Red Limited, Sandpiper Castle Limited, to Big Red Holdings Limited for adjusted proceeds of £1,327,013.

Jon Ravenscroft, who is a director of the company, holds 5% of the ordinary share capital of Big Red Holdings Limited.