Self-storage company Safestore has shelved its development pipeline as the introduction of VAT on the sector, exchange rate fluctuations and the summer slowdown take their toll.
Reporting on trading for the three months to the end of July, the company said it had no plans to build stores, despite increasing revenue to £24.9m for the quarter, a rise of £800,000 on the same period last year.
The company opened a 49,500 sq ft store at Paris-Vélizy in August and had planned three further new-builds, including replacement stores in Wandsworth and Birmingham and a new store in Chiswick, W4, but said it would now focus on organic growth.
Growth has slowed over the course of the year, with revenue up 3.4% in the quarter, compared with 5.4% in the year to date.Revenue per available foot was up 3.5% to £19.9m, while occupancy climbed by 8.8% to 67.2%, or 3.4m sq ft.
The company said it had seen a slower start to Q4 in terms of new lets, “particularly during the London 2012 events”.
The euro exchange rate for Q3 2012 was 10.4% lower than Q3 2011, which affected the group by around £600,000 in the quarter. Safestore predicts a similar impact in Q4.
New rules on VAT announced in this year’s Budget will be implemented in October and although the company said it continued to “actively pursue all options available to challenge this decision”, it estimated a negative revenue impact of £500,000 in the final month of the financial year.
Chief executive Peter Gowers said: “During the quarter, we delivered strong currency revenue growth, as well as further progress on our strategic priorities to strengthen the brand, drive operational excellence, build a powerful team and create value.
“As we progress through the fourth quarter, our scale and strong competitive position leave us well positioned to withstand the short-term headwinds of adverse foreign currency movements and the introduction of VAT on UK self-storage.”
