Price cuts lead to dip in profits at United Wholesale Grocers

United Wholesale Grocers has reported an increase in its turnover for the 2021 fiscal, but the business has seen a decline in its profits owing to price cuts and promotions.

According to the recent filing at the Companies House, turnover at the Glasgow-based wholesaler stood at £221.32 million in the year ended 31 December 2021, a modest increase of 2.45 per cent year on year, which the company attributed to the levelling of demand in independent convenience retail.

But, the company's gross profit declined to £16.15m in 2021, a decline of £2.14m, or 11.7 per cent from the previous year’s £18.29m.

“The decrease in gross profit arisen from lower margin rates due to continuous review of pricing and promotional strategy,” the company said.

The operating profit was down by 32 per cent to £7.2m, from £10.57m in 2020, with increases in operating cost adding to the cost of promotional discounts offered to customers.

However, cash generation has been positive during the period, increasing by nearly £1m to £17.86m in 2021, from £16.94m in 2020, which the company said provided it strong financial headroom.

The directors added that the company maintains “appropriate competitive price, value and promotions” to drive the business and provide quality customer experience in the “extremely competitive” industry.