By Maximilian Clarke
Sliding sales have seen the UK’s largest foods manufacturer’s total market share fall during the third quarter 2011, prompting the group’s Chief Executive to launch a 5-point plan for recovery.
Retail sales across the UK remain stunted due to disposable income levels that are declining in real terms, with consumers increasingly reducing unnecessary expenditures. Purchases often deemed unnecessary include branded consumables, with supermarkets all reporting increased sales of own-branded products- which can be up to 50% cheaper than competitors. This has resulted in a decline in sales for Premier Foods Plc (LSE: PFD), whose brands include Ambrosia, Bisto, Branston, Oxo, Quorn and Mr Kipling.
Sales of Hovis, a Premier Foods brand, dropped by 6.2% despite the overall UK bread market dropping by just 1.8%. the difference is due to increased competition in the sector, particularly from the cheaper own-brand alternatives.
“While the current trading performance continues to be disappointing and significantly behind our expectations, we have already identified a number of steps to build a more profitable business,” commented Michael Clarke, Chief Executive Officer. “These include focusing on 8 „Power Brands‟, strengthening our sales and marketing execution and reducing our cost structure.
“Our immediate priority is to conclude discussions with the banks to revise our banking covenants and put in place refinancing facilities. This process is well underway and we are hoping to reach a successful conclusion in due course.
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