Wholesale retailers Kitwave has raised its profit forecasts after shrugging off supply chain issues to report strong trading.
The North Shields company, which floated on the AIM exchange for the first time in May, posted a trading update highlighting a strong performance in the second half of the year, with trading returning to pre-pandemic levels following the easing of Covid-19 restrictions.
It said adjusted operating profit is “significantly” ahead of expectations, which had been cautious amid pandemic uncertainty.
Read more: Find more retail news here
Kitwave bosses already said that, while many industry peers have been impacted by HGV driver issues, its in-house fleet of around 400 delivery vehicles and drivers meant the group had been able to continue as normal.
It has, however, seen the first signs of inflation in its cost base over the last few months, but said it does not expect profitability to be adversely affected.
“This is not a new phenomenon and one with which the group has dealt with successfully on many occasions in its 35-year history,” the firm said.
Meanwhile, work is progressing on the group’s new warehouse in Wakefield, West Yorkshire, which will help Kitwave meet future growth expectations in its foodservice division.
The warehouse is expected to open in the first quarter of next year.
Looking ahead, the firm said its balance sheet puts it in a strong position to grow organically and also capitalise on the fragmented nature of the UK grocery and foodservice wholesale market by acquiring smaller regional competitors.
The group has also appointed Ben Maxted, group operations director, head of the frozen and chilled division, to the board as chief operating officer.
Paul Young, chief executive officer of Kitwave, said: “I am pleased to report strong trading in the second half of the year, not only driven by the seasonal nature of our business but also due to the easing of Covid-19 restrictions. As a result, the group expects to report a profit before tax for the year to 31 October 2021 that is significantly ahead of expectations.
“As we enter the new financial year, the outlook for the group remains positive. Assuming no further national lockdowns or disruptions to the leisure and hospitality sectors, trading in the foodservice division should continue to recover and we expect will return to or exceed pre-pandemic levels. Initiatives are in the process of being implemented to drive organic growth throughout the group, while the board continues to review opportunities for acquisition that fit with its search criteria.”
Kitwave was formed in 1987 after the acquisition of single wholesaler in North Shields specialising in confectionery.
Through a series of acquisitions, it now has more than 1,000 employees and a network of 26 wholesale depots supplying a wide range of food, alcohol and tobacco to around 38,000 shop owners.
You can get all the day’s business news from the North East sent to your email inbox each morning.
By signing up here, we will deliver the headlines from companies in Tyne and Wear, Northumberland, County Durham and Teesside straight to your email inbox every morning.
Our specialist team of business writers will bring you stories from a range of sectors, reporting on companies large and small.