Insider Media Limited

Convenience store retailer Rippleglen plans to further reduce branch numbers this year by shifting its focus away from tobacco retailing. In accounts for the £100m-turnover Birmingham business, it revealed plans to split into three trading divisions following a management buyout last year.

These are: premium confectionery, tobacconist and newsagents (CTN); high street discount stores; and home news delivery stores.

Rippleglen, which has more than 130 branches operating as Arden News, Supernews, Candies and Supercigs, said it will also continue to develop its interest in convenience stores and shops in hospitals and travel sites.

"It has been necessary to divisionalise the business so we are able to compete successfully in each recognised business channel," the directors' report said.

The retailer, which was founded in 1979 by Harry Medcalf, completed its first Spar store conversion in September in Leicester after it recognised the need to sign up to a symbol group.

Turnover slipped from £103m to £95m for the year ended 31 July 2011 as the number of retail branches fell by 15 to 133 - eight before the MBO and seven after. All sites sold were minor loss makers or modest contributors, finance director Peter Hyett told Insider.

"The advantage of our shops is that for us they may have reached their 'sell by date', but still have a value when sold to independents," he said.

Eight further branches have been sold or disposed of since the year end, with more planned for the second half, Hyett added.

A pre-tax loss of £442,000 was recorded for the year after a share option charge of £708,000 was created by the issue of further shares at a discount triggered by the MBO.

Before the share option charge, pre-tax profit was up £10,000 to £266,000.

"This was an excellent achievement as the senior management were also heavily involved during the year organising the MBO," the directors' report said.

New managing director Mike Colley took over the business from Medcalf in April, with funding provided by Lloyds TSB.

The business, which has its headquarters on the Saltley Business Park, employs about 600 staff – about 70 fewer than 2010.

"The retail environment continues to be extremely challenging and competitive with more companies being forced into cut price and promotional activity to remain viable.

"The history of this company is in the high-volume, cut-price market and although this activity brings more retailers into direct competition with us, we have the enormous benefit of having management and staff who are highly competent and hugely skilled in this sector," the directors' report added.

Dividends of £52,000 were made for the year, compared to nothing in 2010,

Rippleglen continued to be cash generative with the elimination of the overdraft and cash book balance of £585,000 at the year end.

Hyett said trading since 31 July 2011 has been broadly in line with budget in "tough market conditions".