Caffe Nero remained tight-lipped about its intentions for struggling rival Coffee Republic today as it outlined aggressive expansion plans.
Chief executive Gerry Ford said he wanted to “stay out” of speculation about the chain, which received an approach from an unnamed party last month.
Caffe Nero has built up a 10.5% stake in Coffee Republic and analysts view it as a possible bidder along with high street sandwich retailer Benjys.
Ford said: “We are the third largest shareholder but it’s a fluid situation and I’d prefer to stay out of speculation about it.”
He added, however, the group was keen to add at least 30 sites across the UK over the next 12 months but could open as many as 80.
Caffe Nero revealed it had secured a new £7m banking facility last month and it now has £10m set aside for growth.
Ford said two-thirds of the new sites were likely to be outside the M25 where there was “much more opportunity” for the business.
He added that he expected most of the sites to come from acquiring property put up for sale by smaller coffee bars or other retailers.
“It’s an interesting time, we are doing really well and there is a lot of opportunity. We intend to take advantage of it,” he said.
Results today showed sales across the group edged up 2% in the year to 31 May on a like-for-like basis, which excludes income from new sites.
The acquisition of 29 Aroma cafés from McDonald’s six months ago helped total turnover soar 70% to £26.6m.
And the growth meant pre-tax losses were cut back to £400,000 before one-off costs from £1.5m in the same period a year ago.
Ford said: “In spite of challenging macro economic conditions, this has been a year of substantial growth for the group.”
He added that current like-for-like growth was still in single-digits despite fears the froth is beginning to come off the coffee market.
In July, Coffee Republic reported annual pre-tax losses of £7.5m after seeing sales plummet 6.8% on a like-for-like basis.
Bottom-line pre-tax profits at Caffe Nero were £2.8m, against £2.7m a year ago. Its shares were unchanged at 25.5p.
EGi News 12/09/02
