THE north’s biggest grocery supply operation passed £1 billion in revenue last year, achieving a record £53 million in pre-tax profits.
But a senior figure at the Henderson Group has warned surging energy costs and rising inflation has created “a perfect storm” for the retail and food economy, meaning 2021 could well be a high watermark for the company’s profitability.
Sales director Paddy Doody said the group is braced for multi-million pound increases in energy throughout its entire estate, which includes 100 retail outlets, warehouses and a fleet of vehicles.
He also expects food prices to continue rising due to the impact surging costs are having on its suppliers.
“Around 75 per cent of our fresh food comes from the island of Ireland and we have a lot of small suppliers and they’re going to feel that pinch as well.
“I just can’t see how we’re not going to see more cost increases and more retail price increases.”
The retail and food service group, which supplies around 513 Spar, Vivo and Eurospar stores around Northern Ireland, saw its revenues rise 11.4 per cent for the year ending December 31 2021, putting it among an elite category of £1bn businesses here.
Strong recovery in the group’s food service division post-lockdown, coupled with buoyant supermarket sales, helped Henderson record £52.7m in profit before tax during 2021.
The bulk of its profits are set to be pumped back into the business.
Last year also saw the group spend a record £40.5m in capital projects. Mr Doody said a similar level of spend is expected in 2022.
He said the Spar retail model had performed very well during the pandemic: “We got a new cohort of shoppers coming into our stores because of Covid. We had the right stores, in the right places at the right time.
“All those things helped to give a very pleasing 2021.”
However, the sales director said the evidence in the year to date points to people spending less at tills.
He revealed that like-for-like grocery sales for the year to date are sitting around five per cent up on last year.
“But if you work on the basis that food inflation is probably running from the start of the year about 7-8 per cent, we’re probably dropping back on volume terms,” he said.
“So we’re seeing a cautiousness coming into shopping behavior, there’s no doubt about it, and I don’t think we’ve seen the worst of it, I really don’t.
“I think we’re in for a really tough winter.
“We would be cautious about the next six to 18 months, and how that might impact in terms of our own costs.”
Mr Doody said while the issues around the Northern Ireland Protocol still need to be resolved, he said the rising energy costs and inflationary pressures pose a much more significant threat for businesses.
“Those are much, much bigger issues for the entire industry, the entire economy in Northern Ireland, on the island of Ireland and in the United Kingdom.
“For some business it’s an existential threat, there’s no doubt about it.
“We’re facing a perfect storm here, so we have to be very focused on cost control and efficiency within our business to give value to our customers.”
