Mole Valley Farmers has reported a progressive trading year, with revenues, gross margin and operating profit reflecting a year-on-year increase for both agriculture and rural retailing for the year ending September 30, 2018.
The agricultural business and rural stores grew by 8.7% and 3.6% respectively, the company said, while sales across the group increased by over 5% to £490 million in the year. This, Mole Valley Farmers said, was due to several factors including a late spring, followed by a dry summer, which drove ‘out of season’ demand for livestock feeds and other inputs.
Group operating profit increased significantly over the previous year to £3.8m, however, some exceptional and unavoidable one-off operating cost constrained overall net profitability before tax to £1.4m.”
Andrew Jackson, chief executive of Mole Valley Farmers, said: “Significant expense was associated with the intended acquisition of Countrywide Farmers, which unfortunately didn’t gain phase one approval from the Competition and Markets Authority. Fortunately, we did eventually manage to acquire three stores from the Countrywide Farmers administrator; Penzance, Tavistock and Cirencester, each of which have since been well supported by local customers who had feared losing their local agricultural store.
“In addition, un-budgeted expenditure became essential to restore operational replenishment capability to our network of rural stores.”
At the start of the trading year, a scheduled move to a single, central distribution location had taken place. The intention was to consolidate warehousing requirements into one location and provide a more cost-effective delivery service to all stores.
However, from late October until early Summer, demand from stores exceeded operational capability, leading to poor product availability, added cost and some inconvenience for customers.
Mr Jackson added: “We have since reduced our reliance on central distribution and reinstated a more inclusive supply chain solution. This new approach has utilised supply chain opportunities, improved direct-to-store deliveries, corrected on-shelf availability, de-risked the business from seasonal volume spikes and crucially, reduced costs back in-line with plan.”