Preliminary Results 2004/05

Notes

While our sales have been strong, margin has, as previously signalled, been reduced because of the price cuts we have implemented. Over the year, however, we achieved a better margin result than we had budgeted. We had originally planned that our price cuts would result in a margin hit of 110 basis points. In the end, we managed the impact to only 80.

This has been achieved by successful management of pricing and the promotional mix and because of the introduction of a better buying programme which has taken more than £30m off our cost of goods in the year. How have we done this?

Well, on national brands we have benefited from our higher volumes and have, therefore, enjoyed more support from our suppliers.

Own-brands have benefited most from our focus on better buying. There are a variety of methods to reduce costs. But let me give you a short example. The wet wipes we sell were bought by seven different teams - each covering what was seen as a distinct area of the business like No 7 or baby. We aggregated the volume and held an e-auction which took £2.1m off the cost of sourcing these products.

LINK: Key to our sales improvements has been a renewed emphasis on better stores and better service.