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Robert.Jervis_43227 Mar 31

Wincanton delivers strong trading performance & expands eCommerce capacity

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Photo - Avision Young
“It is very satisfying to see all four parts of the business in growth and contributing positively to the Group”
Wincanton has provided an update on Q4 trading performance in advance of the release of its full year results on 20 May.

Highlights
  • Group underlying revenue in Q4 +15% year-on-year, Digital and eFulfilment +40%
  • Repayment of £5.8m of furlough support
  • Full year results anticipated to be above market expectations
  • Acquisition of lease on large-scale, fully automated eFulfilment facility in Rockingham, Northamptonshire
  • New business secured with B&Q, Snug, Heineken and Kelkay

Q4 performance update

The Group has continued to perform strongly in the fourth quarter and underlying revenue, excluding disposed businesses, is expected to be around 15% ahead of prior year, with growth in all four sectors.

Digital and eFulfilment is again set to deliver year-on-year growth of c.40% in the period. In addition to the high volumes in its existing eCommerce activities, the sector has been bolstered by the start-up of new business for Dobbies and Dwell and the commencement of operations at its west London Customer Fulfilment Centre (CFC) for Waitrose. The CFC has been running for just over three weeks and, in that time, the team has picked and dispatched close to 20,000 orders.

Public and Industrial is expected to show year-on-year growth of c.10% in the quarter. There has been a ramp-up of Public Sector activity, most notably on contracts covering Inland Border Clearance services and the storage and distribution of Covid-19 testing kits, and the Group has experienced improved volumes for its building materials customers. This has been partially offset by lower levels of activity in the energy business due to the reduction in demand prompted by the lockdowns across the UK.

Performance in Grocery and Consumer remained strong and is expected to grow by around 3% against a challenging year-on-year comparison, with Q4 2019/2020 seeing the emergence of panic buying from consumers in the early weeks of the pandemic. The sector has secured a two-year contract with Heineken to handle products to retail outlets throughout England and Wales. General Merchandise (+c.28%) has benefitted from good levels of demand during the recent lockdown, particularly for DIY products. A new three-year contract was secured with garden landscaping products manufacturer, Kelkay, to provide a full transport service.

The Group has maintained a strong balance sheet whilst also repaying both its deferred pension contributions and VAT in full. Following the continued strong performance through the second half of the year, Wincanton has repaid £5.8m of Government support received under the Coronavirus Job Retention Scheme (CJRS), initially taken to protect jobs in its retained, closed book business. The Group expects to deliver full year profits above market expectations, after taking into account repayment of furlough support.

Wincanton expands eCommerce capacity

Wincanton will be leasing a state-of-the-art, automated eFulfilment facility in Rockingham, Northamptonshire, as part of its ongoing strategy to extend its eCommerce proposition, creating additional capacity to drive expansion. The new facility has already enabled the Group to secure business with B&Q and Snug, and there is a healthy pipeline of further opportunities.

The 528,000 sq ft facility has been designed to deliver highly automated eFulfilment services to multiple clients, reducing unit costs and shortening lead-times in response to the rapidly changing demands of the consumer. The site is the Group’s second and largest multi-user eFulfilment centre, following the acquisition of a facility in Nuneaton in 2020, and it is the latest evidence of Wincanton’s strategic focus on the high-growth eCommerce market.

An agreement has been reached with B&Q to support their e-commerce growth, adding to the extensive range of supply chain solutions already provided by Wincanton for Kingfisher. Our new automated site in Rockingham will enable B&Q to rapidly expand the number of products available to customers on the shortest possible lead times.

The site, which will be leased for an initial period of three-and-a-half years, will house the Group’s first Customer Innovation Centre and Wincanton will further invest in the facility to develop next generation robotics and digital solutions to maintain its leading position in this exciting market.

James Wroath, Chief Executive Officer of Wincanton, commented:

“Wincanton has delivered another strong performance, maintaining our positive momentum throughout the final quarter of the year. Our people have met the challenges associated with operating in another lockdown and it is very satisfying to see all four parts of the business in growth and contributing positively to the Group.

“We are also delighted to have expanded our eFulfilment capabilities and capacity further with our new site in Rockingham. This serves as a marker of our ambitions to capitalise on the growth opportunities presented by the increasing prominence of online retail.”

The Snug contract will run for three-and-a-half-years and will see Wincanton fulfil all customer orders, with large products being delivered via Wincanton’s industry-leading two-person home delivery network. Wincanton will create an end-to-end supply chain for Snug comprising of the management of inbound container stock; inventory management and stockholding; pick and despatch of customer orders and the handling and processing of returns.
 
The agreement reflects Wincanton's reputation for high-quality services for multichannel retailers and its expanding role in the eCommerce marketplace. It also builds on Wincanton’s recent success in the home delivery space demonstrated by contract wins with Dobbies, Dwell, The White Company and Sofa Club in the past year.
 
Snug launched in 2019 offering the UK’s first-ever sofa in a box, provides high-quality sofas on-demand for simple, no-tools assembly directly in customers’ homes.
 
Paul Durkin, Managing Director of Digital & eFulfilment at Wincanton, said:
 
"Snug required a long-term logistics partner to manage its warehousing fulfilment operations, as well as provide a critical role on the front-line meeting customer’s delivery expectations.
 
"Wincanton’s well-established eCommerce and eFulfilment capabilities, enhanced by our new development [in Rockingham], means we are well placed to support Snug with their continued growth."
 
Rob Bridgman, Founder & CEO at Snug, said:
 
"Snug started the 'sofa in a box' movement and in doing so has created one of the UK’s fastest-growing eCommerce brands. Snug's ready to assemble sofas are delivered in days and assembled in minutes without the need for tools, setting us apart from all other sofa brands.
 
"As category creator and leader, we are continuing to invest in offering a world-class customer experience and Wincanton offers us capabilities to scale at pace and to deliver on our customer promise."