Losses at Booths have more than doubled as the upmarket supermarket chain struggled to compete in the fierce grocery battle for market share, with rising costs also hammering margins.

Sales at the retailer, which reportedly hired bankers at Rothschild in November to explore a potential sale, with Amazon understood to be in prime position for a takeover, sank another 4.3% to £263.4m in the year ended 1 April 2017.

Continued food deflation in the period and intense competition from other major supermarkets and discounters held back the grocer, often referred to as ‘the Waitrose of the north’.

Gross margins came under pressure (falling from 10.7% in the prior year to 9.1%) from higher operating costs at new, larger stores and increasing labour costs, with £1m added to its wage bill upon the introduction of the national living wage in April 2016.

Booths tumbled to a trading loss of £1.2m as a result, compared with profits of £3.3m in 2015/16.

Pre-tax losses ballooned to £13.5m as Booths was forced to write down the value of its supermarket estate by £17m. The retailer said in accounts filed with Companies House that industry conditions and the decline in profitability over the past two years led to the impairment charges.

Expenses of £300,000 related to a £31m refinancing and £300,000 of costs incurred after the closure of the final salary pension scheme also hit the group. However, losses were partly offset by £7.4m profit on disposal of ten non-core properties.

Booths said EBITDA remained “reasonably solid” at £10m, although this was down from £13m in the previous year.

“The financial year 2016/17 was another challenging one with further retail price deflations, intense competition and economic and political uncertainty that has constrained consumer markets and sales growth potential,” CEO Edwin Booth added in the accounts.

Booths was hit hard in the previous 2015/16 year by flooding caused by Storm Desmond in Cumbria, leading to the closure of a number of stores for a time, directly resulting in a 1.4% loss in sales.

Since the 2016/17 year end, Chris Dee, chief executive of 22 years, and finance director Matthew Rothwell left the business, with Edwin Booth taking charge. In July, COO Nigel Murray, FD Ross Faith and independent non-executive Kevin Roberts were appointed to the board.

Booth said: “It’s fair to say it’s been a challenging few years for Booths but we greet 2018 with a renewed focus and a motivated board team in place.

“There’s positive momentum throughout the business and Booths is now well placed to adapt to market conditions and return to growth through existing and new opportunities.”

In March, Booths completed a ground rent transaction, raising £31.3m through Alpha Capital, a specialist real estate investor. The funds raised were used to more than halve Booths debt to £30.8m. Under the agreement, Booths retained the freehold of stores.

During the year, a renewed focus on Booths-branded products led to the introduction of 400 new products, including more than 70 ready meals and a newly revamped range of Booths brand wines.

In October 2017, Booths revealed its products would be available on Amazon Fresh across 302 postcodes in London, Surrey, Hampshire, Bedfordshire and Hertfordshire.

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