Premier Foods, the debt-laden maker of Hovis bread and Branston pickle, yesterday unveiled a slump in sales of own-label supermarket lines and warned that a poor third-quarter would hit its 2010 figures.
Premier also confirmed plans to close its defined benefit pension scheme to new members and move existing employees on final salary pensions to pensions based on their career average earnings. The group is grappling with a £431m pension funding black hole.
Premier's total sales tumbled by 4.2 per cent to £606m for the three months to 30 September, as consumers shunned the supermarket own-label lines produced by the company. Sales of its non-branded products plummeted by 10.4 per cent, although its brands performed much better, only slipping by a modest 0.5 per cent.
Among those, sales of the company's biggest name "drive brands", such as Hovis, Mr Kipling cakes and Ambrosia rice puddings, actually rose by 3.9 per cent.
Robert Schofield, the chief executive of Premier, said: "We still aim to make progress in the full year but the slowdown in Q3 means this is likely to be more modest and is, as always, dependent on Christmas trading."
This month, the company, which is weighed down by £1.37bn of net debt, received approaches from private equity firms, which could lead to the sale of its meat-free business, including the Quorn brand. It could be the first of a string of disposals as the group seeks to reduce borrowing.
The UK's biggest food producer said yesterday that discussions with a "number of parties" regarding the disposal of the meat-free business were ongoing. Premier Foods also said it was "trying to resolve" its dispute with Tesco, the grocery giant, which has stopped selling 11 out of 18 Hovis lines after a spat over wheat-driven price rises.
Premier's scheme closure comes despite Mr Schofield being a supporter of final salary pensions. They are now all but gone from the private sector.
Retailers upbeat despite slowing sales growth
Sales growth on the high street slipped in October, but retailers remain upbeat about their prospects for next month's early Christmas trading. Retailers of clothing and footwear led the charge, but across all retailers 58 per cent said that sales rose in October, with just 22 per cent reporting a fall, according to the CBI's Distributive Trades Survey.
The net balance of 36 per cent of retailers reporting rising sales was below forecasts of a positive balance of 47 per cent for October and the 49 per cent recorded in September. However, a balance of 43 per cent of retailers expect to see higher sales volumes in November, compared with last year, as consumers bring forward purchases ahead of VAT rising to 20 per cent on 4 January. Lai Wah Co, the CBI's head of economic analysis, said: "We should also see more of a boost to sales as shoppers look to beat the new year VAT rise, but looking beyond that, broader consumer caution may temper growth in spending into 2011."