31 May 2024
Cooks
Coffee
("Cooks
Coffee", the "Company" or the "Group")
Preliminary results for the
year ended 31 March 2024
An ethical café group with
great cafes owned and run by local people.
Cooks Coffee (NZX:CCC;
AQUIS:COOK), the international coffee
focused cafe chain and parent company of the Esquires, The Organic
Coffee Co brand, which is dual listed on the Aquis Market in London
and the NZX in New Zealand, announces the Company's Preliminary
Report for the financial year ended 31 March 2024 ("FY24"). Figures
reported below are for continuing business and the prior period has
been restated to provide the appropriate comparative
data.
Highlights
-
Total franchisee store sales in UK & Ireland
up 18% at NZ$58.2m (FY23: NZ$49.5m).
-
UK store sales up 21% at NZ$38.3m (FY23:
NZ$31.6m), double the industry average of 9%.
-
Ireland store sales up 11% at NZ$19.9m, (FY23:
NZ$17.9m) compared to the industry growth of 1%.
-
75 Group sites in the UK and Ireland as at 31
March 2024, up from 64 as at 1 April 2023.
- Net
store numbers growth in UK of 18% and 15% in Ireland versus
industry growth of 4% in UK and 1% in Ireland.
-
Group revenue, which is highly correlated to store
sales, up 19% at NZ$4.7m, NZ$3.9m.
-
EBITDA of NZ$0.4m before impairment of
receivables.
-
The focus on suburbs and market towns has
sheltered Esquires branded stores from the permanent changes in
consumer behaviours post Covid, such as the working from home
lifestyle change.
-
The strategic direction plus the focus on organic
coffee products and an enhanced food offering with local sourcing
where possible, delivered by local owners of the franchised stores
- 'The local chain' has proved successful for the brand.
-
Growth in UK has been driven through strong
performances by the Regional Developers in the Southeast, London,
East England & East Midlands. The appointment of two new
Regional Developers during FY24 for the North of England and the
Southwest and South Wales will accelerate the growth in those
regions.
-
Appointment of Aiden Keegan as Group CEO. Aiden
brings more than 20 years' experience with the company in both core
markets of UK & Ireland to the role.
-
Esquires Coffee Houses Ireland were awarded the
Irish Enterprise Award for 2024 as the
'Best Modern Organic Coffee Shop Enterprise'.
-
Esquires Coffee at Caerphilly were awarded the
'Best Sustainable Café Chain' in Gwent at the Welsh Enterprise
Awards in 2023.
-
Target store numbers for UK & Ireland by FY34
is 305.
Commenting, Cooks Coffee Executive Chairman Keith Jackson
said: "We are delighted to report
strong sales growth across our existing estate of coffee stores as
we continue our expansion programme of new store openings. We have
an exciting growth pathway clearly defined and have Aiden Keegan
appointed to drive the future development of the business. Aiden is
uniquely qualified for the role having spent 14 years as Operations
Manager of the Irish business and the last almost six years as CEO
of Esquires Coffee UK."
Operational Business
Performance
United
Kingdom
Esquires Coffee UK store numbers
increased to 60 at 31 March 2024, from 51 as at 31 March 2023, with
13 new Esquires stores opened and 4 closed.
Store sales grew 21% with like for
like sales up 6%. The strong pipeline of new outlets that were open
for the full years FY23 and FY24 contributed 21.6% of total sales
in FY24.
Sales in FY24 were particularly
affected by the refurbishment programme at Horsham, where the store
was closed for 13 weeks, but the sales on re-opening have exceeded
expectations by more than doubling pre-refurbishment sales
levels.
As at the end of May 2024 there are
64 stores operating, with new stores opened in Colliers Wood and
Pinner in London, Newport in Wales, and Sudbury in Suffolk, during
April and May 2024.
Two new Regional Developers were
appointed in the UK in FY24 with one covering the Southwest of
England and South Wales, and the other covering the North of
England, including the North of Wales.
The Regional Developer model that
has been operating in the Southeast of England since 2018 and in
London, East England and the East Midlands since 2021, has proved
very successful and is now being rolled out to the remainder of the
UK. Developers for Scotland and Northern Ireland are currently
being sought.
Ireland
Store sales
increased by 11%, totalling NZ$19.9m (FY23 NZ$17.9m). Like for like
store sales were up 6.8% versus FY23.
Outlet numbers at the end of the
year were 15, a growth of 15%, with an encouraging pipeline of new
stores in development for the balance of 2024 and beyond. Store
numbers in Ireland have been restated from prior years to reflect
actual locations even if the site itself has multiple points of
sales.
Sales in FY24 were affected by the
impact of the fire in the Longford store that meant the store
operated from temporary premises for most of the year. The
franchisee and staff did a superb job, and sales were maintained at
approximately 45% of normal levels. In addition, the Airside store
at Swords in Dublin was closed for 17 weeks for a refurbishment
programme. Management estimate that absent these factors and the
53-week year that the Irish normalised sales would have been more
than 20% up on FY23.
As at the end of May 2024 there are
16 stores operating with a new store opened in Galway in April
2024.
Global
Cooks operating revenue in the
global segment was in line with the previous financial year as the
international franchised markets continue to recover. New outlets
were added in Pakistan and Portugal, with the Middle East markets
stable.
Balance Sheet
Total equity in the Company reduced
to NZ$(4.0)m reflecting primarily the non-cash
impairment of goodwill and intangible assets relating to the Triple
Two business.
Triple Two
In
September 2023, the Triple Two subsidiary was placed into voluntary
liquidation.
Triple Two had numerous sites that
were non-viable in a post Covid market environment as they were
more central business district focused relative to the suburban and
smaller town focus of Esquires stores. Information became available
showing that commitments were made that potentially could have been
significant liabilities for the Company. This information showed
that in addition to sites that were no longer viable that the
ongoing revenue streams were well below expected levels.
The Triple Two investment was fully
written off in the September FY24 half year accounts. This non-cash
write-down has resulted in the company reporting NZ$3.99m of
negative equity in the full year accounts.
The Board believes that there is no
further impact of the Triple Two liquidation going
forward.
People
The Company announced the
appointment of Aiden Keegan as Group CEO in March 2024. Aiden has
had 20 years' experience with the Esquires brand, spending 14 years
in the operations team in Ireland and since 2018 has been at the
helm of the Company's largest subsidiary, Esquires Coffee
UK.
After almost 25 years with the
Company that he founded our Irish Managing Director, Tony McVerry
has advised of his intention to retire at the end of June 2024. He
will be replaced by Brendan Duigenan. Brendan has been a lifetime
member of the coffee industry and has held senior roles in both AMT
and Starbucks in Ireland.
As part of the planned relocation of
the Board to the UK, Mike Hutcheson will retire from the Board in
June 2024. Mike is a unique marketing talent who has given
excellent service and advice to the Company over the last 10 years.
This move along with Aiden's elevation shows the strong focus that
the Company is adopting on the core markets of UK and
Ireland.
The Board would like to acknowledge
the dedicated performances of all the parties involved in the
Group's activities delivering excellent service to our customers
every day. In the core markets of UK & Ireland an estimated
200,000 customers are now served each week by our great team led by
Regional Developers and franchisees along with their staff and ably
supported by the company's team.
Outlook
The FY25 financial year has begun
strongly with four new stores opened in the UK and one in Ireland
in April & May. UK store sales after 8 weeks of FY25 were up
27.3% on FY24 whilst in Ireland sales were 7% up on
FY24.
Summary
The Board is encouraged by the
strong growth which continues to exceed reported industry growth in
both core markets and would like to acknowledge the dedicated
performances of all the parties involved in the Group's activities
delivering excellent service to our customers every day. In the
core markets of UK & Ireland an estimated 200,000 customers are
now served each week by our great team led by Regional Developers
and franchisees along with their staff and ably supported by the
company's team.
Target stores for the end of March
2025 are 98 with 80 in the UK and 18 in Ireland, a growth of 31%
over the 75 operational at the end of March 2024. The Company is
expecting to continue to grow at this rate of stores being added
per annum to have more than 300 stores operational in UK and
Ireland by FY34.
The Group's Esquires brand has a
strong pipeline of opportunities as it continues its commitment to
building an ethical café group with great cafes owned and run by
local people. We look forward to making further progress and to an
improved financial performance in the current financial year with
the experienced Aiden Keegan at the helm.
Keith
Jackson
Executive
Chairman
The FY24 financial statements are
appended to this announcement and may be accessed here: http://www.rns-pdf.londonstockexchange.com/rns/6179Q_1-2024-5-31.pdf
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