Revenues have surged 24% at Bread Holdings as the upmarket bakery group behind the Gail’s chain prepares a sale of the business next year.
Bread increased turnover by more than £15m to £79m in the year to 28 February 2017, a slowdown from the 42% growth in the previous 12 months.
Gail’s boosted sales by 30% on strong demand for artisan bread and premium coffee, with 10 new bakeries also bulking up the top line and increasing its portfolio to 38 stores, while The Bread Factory wholesale business recorded 7% growth. However, operating profits shrank 24% to £5m as margins were squeezed by rising ingredient prices, higher labour costs and the falling pound. Bread also invested in operational improvements across the group to fuel the growth, as well as the new retail stores
The accounts come as the group readies a sale worth up to £200m. Patisserie Valerie has been linked as a possible bidder.
“We are delighted that the UK market continues to grow in appreciation for quality artisan products, and that our increase in sales means more and more people can enjoy our handmade baked goods,” a spokesman told The Grocer.
“The past year has seen a lot of changes in the marketplace that have contributed to increased running costs-in particular the cost of labour, the price rise of key ingredients like butter (French and English) and Madagascan vanilla, in addition to the pound falling against the euro-but we are committed to sourcing the best ingredients, rewarding our staff and never compromising on the quality of our products.”
He added: “We are passionate about bread, pastries and cakes and strive to preserve the culture and tradition of artisan baking. As every product is made by hand, there is a direct correlation between our workforce size, operational space and the number of artisan products we can produce.
“This past year we have invested in, and will continue to invest in our professional bakers, increasing our operational space to match our growth, and opening new Gail’s to create neighbourhood bakeries that local communities deserve.”
The latest accounts come as the group readies a potential sale of the business, worth up to £200m, according to dealmakers.
KPMG were appointed in October to explore options, including a potential flotation, with the process still at an early stage.
Press reports last month touted Patisserie Valerie parent Patisserie Holdings as a possible bidder.
Luke Johnson is chairman at both companies, with the serial entrepreneur’s Risk Capital Partners owning 39% of Patisserie and a 60% stake in Bread.
Bread Holdings sales have soared from about £20m in 2011 when Johnson invested in the group.
Growth has been driven by its focus on the high-end bakery market, expansion of the Gail’s store estate, a string of acquisitions and the strengthening of contracts to supply supermarkets and the foodservice industry.
The group again featured in The Grocer’s list of 50 fastest growing, privately owned fmcg firms this year, with a two-year compound annual growth rate of 33%.
CEO Tom Molnar, who also owns a significant stake in the group, launched Bread Holdings with Ran Avidan from a site in north London in 2005 after teaming up with Gail Stephens, who formed The Bread Factory in 1993.
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