Goodfella's sees sales surge after relaunch
Northern Foods posted a return to sales growth after its rebranded Goodfella's pizza range secured a bigger slice of the UK market.
The Leeds-based company, which employs 10,000 people, was also helped by the return of 'Vinnie the panda' after the animated character used in adverts to promote Fox's biscuits went into hibernation during the World Cup.
Northern posted like-for-like sales growth of 7.1% in the second quarter to October 2, compared with a decline of 1.6% in the previous quarter.
The turnaround, which was ahead of market expectations, was driven by a 10.9% rise in bakery like-for-like sales and a slowdown in the recent sales falls seen in the frozen foods division, which includes Goodfella's pizza.
Supported by its 'pizza fairy' advertising campaign, the new-look Goodfella's brand increased its market share from 16.3% in May to 21.1% last month.
Like-for-like sales in the frozen division were down 16.2% in the second quarter as year-on-year figures continued to reflect the company's decision to end certain retail contracts in order to boost margins.
In the chilled foods division, like-for-like sales were up 16.4% in the second quarter after a continuing strong performance in ready meals and from sandwiches and salads, following contract wins with British Airways and Costa Coffee.
Northern added that a restructuring meant its factories were well placed to cope with competitive conditions in the key autumn and winter period.
It is also overhauling its organisational structure to manage the business through two divisions - chilled and branded.
The latter will comprise Goodfella's Pizza, McDougalls and Holland's Pies, Fox's Biscuits and Matthew Walker Puddings.
Despite the sales improvement, Panmure Gordon stockbrokers said it still forecast a 28% decline in half-year pre-tax profits to £9.2m as a result of the £5m investment in the Goodfella's pizza relaunch.
Reiterating Panmure's sell recommendation, analyst Damian McNeela said: "Northern Foods continues to face a number of challenges to its core businesses, such as input cost inflation and tougher competition in its frozen business."