eComm rushes to the fore as Clipper adjusts to lockdown

In particular, the company has provided support to online retailers with high e‐fulfilment volumes, as some online retailers experienced extremely high levels of demand, regularly outstripping that seen over the Black Friday period last year. 

The company said: “We are witnessing volume increases of over 100% on a like‐for‐like basis with some customers.”

April 2020 saw Clipper roll‐out additional services for several grocery‐related customers, including Tesco, Asda and Morrisons as they mobilised their operations to address the challenges of COVID‐19. 

The company added: “Importantly, April also saw us begin our supply chain support to NHS frontline staff, including the warehousing and distribution of PPE to hospitals.”

Clipper has been working alongside the NHS on two new initiatives. The first, a separate channel to deliver PPE to hospitals; the second has seen it develop an online portal for fulfilling orders for PPE to GP surgeries, small care homes and home care providers.

In total, the new activities brought on since lockdown, coupled with new contracts coming on stream in Q1 FY21, will add a further 1.5 million square feet of space to Clipper's pre‐existing 10 million sq. ft. infrastructure. The Group has also seen a significant increase in its tender pipeline; the annualised revenue of the probability‐weighted pipeline stood at over £50 million as at 18 May 2020, a significant increase on the same period last year.

In line with expectations 

Clipper Logistics reported trade in line with expectations for the financial year to April, with disruption noted from the onset of lockdown.

The Group has continued to trade well throughout the year and financial performance was broadly in line with expectations, delivering an EBITA of circa £24m for the year to 30 April 2020, an increase of nearly 19% on the prior year. 

From the onset of lockdown on 23 March, there was a period of disruption within the Group's operations for bricks‐and‐mortar retailers, which was impacted as customers closed their stores. Retail activity saw a period of hiatus, as consumer confidence was adversely impacted.

Steve Parkin, executive chairman at Clipper said: “These have been unprecedented times, and the support we have received from our colleagues, who have been key to the continuity of our operations has been outstanding. I'd like to extend a personal thank you to all of them as they have demonstrated a shared sense of purpose and support in these challenging times.”

Outlook

The Board is confident about Clipper's prospects for the new full financial year. It expects the Company to benefit from evolving trends in the retail sector, as COVID‐19 accelerates the shift to online retail:

• as a market leader in e‐fulfilment and returns management services, the Group is already seeing an increase in demand as outlined above;
• the Group is also seeing increased interest in outsourcing; following the successful implementation of a new first‐time outsourcing contract for one major fashion retailer, Clipper is now in discussions with a further leading UK high street retailer to take over their in‐house operation for the first time; and
• the Board also believes that Clipper's Clicklink service is likely to see increased demand as the UK Government looks to encourage the use of Click & Collect initiatives as a means to kick‐starting activity on the UK's high street, while reducing congestion.

In response to the changing requirements of bricks‐and‐mortar retailers, Clipper is also in the vanguard of developing shared user transport networks. This will enable Clipper to service multiple retailers on any given high street. Such initiatives are likely to be key to supporting a wide range of retailers as they reassess supply chain needs.

Meanwhile, Clipper's European business continues to grow rapidly, driven by a growing presence in e‐fulfilment and returns management. Revenue in Europe grew by 41.3% in FY19 and by a further 33.7% in FY20.

The Company‐compiled consensus for EBITA for FY21 is £25.8m. While COVID‐19 still presents some risk, the Board believes that EBITA will be comfortably ahead of these expectations.