Booker is buying the Budgens and Londis retail brands in Great Britain from Irish group Musgrave for £40 million, through the purchase of Musgrave Retail Partners GB Ltd.
Booker plans to develop the Budgens and Londis brands alongside its existing retail brands Premier and Family Shopper.
The Budgens/Londis supply chain will be used for delivery to Booker retail customers, improving utilisation and reducing costs. Booker said Budgens and Londis customers would retain their brands, but will benefit from a better local and national supply chain.
Charles Wilson, chief executive of Booker, said: “Booker, Londis and Budgens are joining forces to help independent retailers prosper throughout Great Britain. This transaction should strengthen Londis, Budgens, Premier, Family Shopper and other Booker retailers, through improving choice, prices and service to consumers. Overall it will help independent retailers prosper.”
The Budgens and Londis chains have faced the same competitive pressures as other grocery retailers. In 2013, parent company Musgrave Retail Partners GB Ltd, made an operating loss of £67.8m on sales of £899.2m. Following that Musgrave put in place a turnaround plan under new management and terminated supply agreements with a number of unprofitable accounts. In 2014 sales were down at £833.1m, but the operating loss was reduced to £11.5m.
Musgrave CEO Chris Martin said: “The grocery market in Great Britain is experiencing fundamental and permanent structural change, with intense competition and a deflationary environment. Given these challenging market dynamics, we carefully evaluated all of the possible options for our GB business. Having received a proposal from Booker, we concluded that a sale to Booker is the right thing for the group and would be the most advantageous outcome for our retailers, colleagues and suppliers in Great Britain. The agreement also includes the development of a strategic partnership with Booker.”
Premier, Booker’s symbol group, grew to 3,082 stores (2,902 stores last year). Sales to these customers grew by 14 per cent.
Family Shopper is a local discount format. Currently Booker has 30 Family Shopper stores and said that although it was early days the response to the format had been encouraging.
Booker turned over £4.75bn for the year to 27th March, up 2 per cent on the previous year. Operating profit was £140.3m, up 13 per cent on the previous year.
* Mark Aylwin, is leaving Booker to pursue other opportunities. He has been responsible for the Booker Direct, Chef Direct and Ritter Courivaud businesses. He will remain with the group until 1st January 2016.
“We are very grateful to Mark for his contribution to the Booker Group,” said Charles Wilson. “Mark joined with acquisition of Blueheath in 2007, developed our Booker Direct business and helped found Chef Direct. We wish Mark all the very best for the future.”
Aylwin was supply chain director of Safeway Stores before joining Musgrave as supply chain director in 2005. He became CEO of Blueheath plc in September 2006.
Rather than replacing Aylwin, Booker is restructuring the operations. Booker Direct will become part of the group retail structure reporting to Steve Fox. Chef Direct will become part of Group Catering reporting to Stuart Hyslop. Ritter Courivaud will be chaired by Dominic Morrey who runs Booker’s Fresh business.