1. News
May 2, 2018

Holland & Barrett’s profit grows as demand for health products increases

Europe’s largest health food chain Holland & Barrett has seen profit growth despite declining high-street footfall and retail sales affecting many retailers.

By Pamela Kokoszka

Europe’s largest health food chain Holland & Barrett has seen profit growth despite declining high-street footfall and retail sales affecting many retailers.

Holland & Barrett posted a revenue growth of 7.1% in the year to 30 September to £656m, with like-for-like sales increasing 4.5% and online sales increasing 23.6%.

Holland & Barrett CEO Peter Aldis, said: “2017 marked a year of further growth for Holland & Barrett and significant investment in our business, people and technology. Whilst we are pleased that we have continued to achieve strong revenue growth, we are particularly proud of the progress we are making towards enhancing the well-being of all of our customers by delivering the best health and wellness advice and highest quality products.

“We were delighted that L1 Retail acquired the business in August 2017.  As a long-term investor with strong expertise in retail, data and technology, we welcome their support and are pleased to have an owner that shares our long-term vision for the business to become a truly global health and wellness retailer.

“We are committed to continuing to invest capital to further strengthen and develop our technology and data capabilities, and will make continued investment in our store and digital infrastructure.  I am confident that recent additions to our team will help to further strengthen our business and help us to accelerate our growth and the quality of our customer offer.”

While many retailers have been affected over the last months by lower footfall, causing store closures and job cuts, Holland & Barrett’s activity remained ‘satisfactory’, and the retailer continues to expand the portfolio ‘where strategically appropriate’.

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According to Nielsen, Europeans are increasingly buying more health-focused products. According to the research, European consumers spend 4.4% more on groceries in the final quarter of 2017.

The products that were focused ‘on health and wellness through organic and free-from ingredients’ were selling especially well.

According to Holland & Barrett, 2017 marked a year of further investment in growth, store expansion and infrastructure with a total capital expenditure of £47m. During the year the retailers have rolled-out 45 new stores and entered nine new franchises. Its key focus is to continue to invest in new technology and data innovation to drive a personalised service and offering to all of the customers across physical and digital channels.

Holland & Barrett has reported over 86 million store visits and 45.8 million UK website visits, ending the year with 13.3 million active rewards for life users in the UK.

“The health store market is highly fragmented globally. There are estimated to be more than 1,000 independent health stores operating in the UK alone.

“Furthermore, there is increasing competition from the national supermarket chains and other retailers, such as chemists, drugstores and internet traders.”

Due to costs relating to subsidiary and higher finance expenses, the retailer’s pre-tax profit has declined to £72m from £115m despite the profit growth.

Some of the costs incurred related to its acquisition by L1 Retail last August.

L1 Retail bought Holland & Barrett from the US private equity powerhouse Carlyle, which owned the retailer since 2010, for £1.8bn. The health retailer was L1 Retail’s first acquisition since the company launched at the end of 2016.

L1 Retail is a part of LetterOne group founded by Russian oil billionaire Mikhail Fridman.