The Connect Group announces results and expansion plans for parcel business
The Connect Group (formerly known as Smiths News) has announced its latest interim results and outlined expansion plans for its parcel distribution activities. In a statement issued today (21 April), the group said that it had delivered a “solid” first half performance, with total revenues up 1.2% to £909.9m and underlying operating profit up 3.3% to £27.7m.
The statement added that the acquisition of Tuffnells Parcels Express in December and the creation of its Parcel Freight division represented a “milestone for the Group”. The Connect Group said that it has been “delighted with the early progress and integration of the business”, adding that “sales volumes in January and February have been strong”.
Looking forward, the Connect Group commented: “The previously stated network expansion plans to expand from 34 depots at the time of acquisition to 40 by 2017 will add new capacity as well as freeing up capacity at existing depots for further growth. In line with this strategy one new depot in Borehamwood has been opened since acquisition and an additional opening is planned for Norwich in June 2015.”
The Connect Group said that “overall” it is “extremely pleased” with the business it has acquired. Since January, it has won almost 300 new customers, “equating to new annualised revenues of £4.5m”.
In an earnings call conducted this morning, The Connect Group’s CEO Mark Cashmore described the acquisition of Tuffnells as the highlight of the quarter. He also praised the new Pass My Parcel initiative, adding that the Group has “clear plans to accelerate investment and progress it at pace”.
Announced in October, Pass My Parcel allows Amazon customers to place an order before 11am and collect at a location convenient to them until 8pm the same day, seven days per week. The parcels are being delivered by The Connect Group.
“The launch of Pass my Parcel with Amazon has proved operationally effective and the first phase of 500 stores has confirmed the potential of the offer,” said Cashmore. “We now plan to accelerate investment up to a total of £2 million this year, increasing the number of parcel shops ahead of our original plan to reach [a] network of 3000 within the next 6 months. This increased number of parcel shops will also provide momentum for the introduction of additional services such as returns collection and help secure new clients.”
Cashmore added that the “operational strength” of the Connect Group’s network has also led to a further opportunity to work with Amazon Logistics.
“In January, we began the trial in Newcastle using our warehouses and vehicles to deliver parcels to consumers’ homes,’ said Cashmore. “The results are really encouraging and we have already expanded the trial to Brighton and Southampton. The Jack’s Bean Coffee offer has grown to over 200 stores in line with our plans to carefully target outlets with high traffic flow and sales potential.”
