Cullens rings up return to black

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The Independent Online

Cullens, the upmarket convenience store, returned to profit after a dismal performance in 1993-94, when it was left licking its wounds from the foray into fast foods with its Reds Chicken and Rib outlets.

A pre-tax profit of pounds 248,000 for the year ended in February compared to a loss of pounds 674,000 last time was mainly on the back of improved sales from its Neighbourhood Food Stores - up 6 per cent on the same period in 1994. Shop operating profits increased by just over 40 per cent to pounds 959,000.

The focus was on a high turnover of product mix helped by the introduction of new brands. Cullens was the first small grocer to stock Virgin's new Energy soft drink. The market was unimpressed. The shares slid 2p from to 14p despite a return to a final dividend of 0.5p after no payout in 1994.

In a deliberately downbeat statement, Robert Rayne, chairman, warned that an "exceptional summer in 1994" pushed profits up - and was unlikely to be repeated even though like-for-like sales have risen 8 per cent so far this year.

Cullens reaped dividends from the public's return to the high street, but faces competition from the development of Tesco's Metro stores and Sainsbury's Central stores, as well as from Harts, another upmarket grocery chain.

The group is pushing on with its strategy to increase profits through new openings in busy high street locations over the next year and a half. A new store has opened on Putney High Street and the group has plans for one of its largest stores yet on Tottenham Court Road, where foot traffic is high. But it will face competition from Tesco's Metro shop on Oxford Street. This brings the total of new stores to 25.

Gearing remains low at 8.6 per cent but Mr Rayne said this would rise to around 20 per cent in the current year as a result of the new store openings. Net assets stand at pounds 4.7m.