'Things are looking up' for discount retail firm

Nov 11 2008 by Peter McCusker, The Journal

A DISCOUNT retailer with North East roots is recovering from a spectacularly bad year which saw it plunge further into the red and suffer a £136m drop in turnover.

Savers Health and Beauty, which was placed 24th in this year’s Journal Top 250 list of North East companies, closed 180 stores across the UK last year.

The company, which was founded by North East entrepreneur Richard Tonks, and formerly based in Darlington, saw annual turnover plummet to £180.3m in 2007 and its loss increase from £16.5m in 2006 to £45.9m in 2007.

However Savers, which still has around 20 stores in the North East, says 2008 is the start of its comeback, with consumers shifting to bargain purchases. A spokesman for Savers, which is owned by Hong Kong based multinational Hutchison Whampoa, said: “2007 was not a good year for the company. The grocers continued to gain an increase in market share through the expansion of their store estates. This is taking sales away from specialists, like ourselves, and forcing them to maintain lower prices – at least in widely available and commodity products.

“Price competition in the mainstream and value brands puts pressure on margins in these sectors – particularly given the cost of fuel, rent, rates and wages.”

However, the spokesman went on to say that wholesale changes in the management which have seen a new MD, Joey Wat, appointed, along with evidence of consumers trading down for bargain products has led to an improvement in 2008. At the end of 2006 the company had 424 stores, this plummeted to 241 at the end of 2007. This is around the level of stores it now has and following this sustained retraction Savers recently opened a new store in Peterborough.

The spokesman added: “Things are looking up for this year. The new management team has very much refocused the business and we will be looking at increasing the number of stores in the future as well as returning to profitability.”

The company was founded as Savers Drugstores in 1988 with a focus on fast-moving toiletries products.

Its name was changed to Savers Health & Beauty in September 1996, to reflect an enhanced product range.

In 2000 it was acquired by Hong Kong-based AS Watson – part of the Hutchison Whampoa empire – which also owns Superdrug in the UK.

In late 2006 it closed its Darlington head office with the loss of more than 80 jobs. AS Watson initially merged the Savers head office function with that of Superdrug, into one office in Croydon, but it has now been transferred to Dunstable. In early 2007 Savers closed its Darlington distribution department, axing a further 160 jobs, and transferring the work to Yorkshire.