Superdrug shrugs off Rachel Reeves’ tax hikes to create over 600 jobs
Superdrug has created more than 600 jobs despite tax hikes introduced by Chancellor Rachel Reeves putting “pressure” on its margins.
The high street chain upped its headcount from 13,845 to 14,479 in 2024, new accounts filed with Companies House have revealed.
The increase comes after Superdrug also created more than 400 jobs in 2023.
The expansion, which included the company opening 13 stores in the year, came despite Rachel Reeves’ increase to the National Minimum Wage “compounding wage inflation”.
Superdrug added that the rise in National Insurance contributions has put a “strain” on its operating costs.
However, the business has managed to mitigate the rising costs and post a pre-tax profit of £136.8m for 2024, up from £111.6m, off the back of its revenue rising from £1.5bn to £1.6bn.
Superdrug’s comments on the impact of Reeves’ tax hikes come just days after competitor Bodycare revealed it has slowed down the pace of opening new stores across the UK as it blamed the government for creating “too much risk and uncertainty”.
The retailer added that “the current climate of increased costs and legislation” is impacting its growth plans.
Bodycare has also said that government policy on the winter fuel allowance and the uncertainty around future tax rises, especially National Insurance, led to Christmas trading not meeting its expectations.
Cost-of-living crisis impacting customers
A statement signed off by the board, Superdrug said: “2024 was another tough year for the retail sector and although inflation reduced throughout the year the legacy impact of higher prices and sustained higher interest rates, contributed to squeezing consumers’ disposable income.
“The continued cost-of-living crisis was prevalent throughout the year meaning customers shopped around as they became more price sensitive.
“Total high street footfall across the UK was down on 2023, as measured by the British Retail Consortium, although the health and beauty sector was one of the few market groups to see retail sales growth year on year.
“Government driven decisions on areas like National Minimum Wage has compounded wage inflation and continues to put pressure on operating margins for retailers, which the company strives to offset through its cost efficiency and procurement activities.”
Superdrug expecting ‘challenging’ future
On its future, Superdrug added: “The directors expect that the UK retail environment will remain challenging and strongly competitive in 2025.
“Consumers sentiment remains subdued and with the household savings ratio the highest for a number of years retailers are having to work hard to capture customers’ spend.
“At the same time upwards pressure on operating costs as a result of legislative changes, especially the increase in National Insurance contributions, continue to put a strain on operating margins.
“However, the company’s strategy is designed to counter these headwinds.
“The continued growth in sales and market share, which the company has delivered over the past few years, demonstrates the ongoing relevance of its customer offer across its broad beauty and healthcare product offering, both in-store and online.
“The company is cash generative and with a strong balance sheet [and] has a range of attractive inveStment opportunities open to it to further consolidate its market position and to drive further growth and operating efficiencies.
“The directors are confident that the strong trading performance in 2024 will continue into 2025 and beyond.”
How chain compares to biggest rival Boots
Superdrug is owned by AS Watson Holdings which is incorporated in the Cayman Islands and is based in Hong Kong.
In separate accounts Savers, which is also owned by AS Watson Holdings, reported a revenue of £791.3m for 2024, up from £754.8m.
Its pre-tax profit also increased from £61.2m to £69.9m.
Superdrug is the second largest health and beauty retailer of its kind in the UK behind Boots.
Last month, CityAM reported that Boots’ profit had surged as the high street pharmacy chain closed hundreds of stores during its latest financial year as its owners abandoned plans for an initial public offering (IPO).
The Nottingham-headquartered business shuttered 334 locations in the year to the end of August 2024, accounts filed with Companies House revealed.
Boots files its results across three firms: Boots UK, The Boots Company plc and Boots Management Services.
Boots UK achieved a revenue of £7.3bn for the 12 months to 31 August 2024, up from £7bn. Its pre-tax profit also surged from £60m to £269m over the same period.
The Boots Company plc’s revenue also increased from £179m to £186m. However, its pre-tax profit was slashed from £122m to £31m.
Boots Management Services’ revenue nudged up from £1.1bn to £1.16bn while its pre-tax profit rose from £55.6m to £61.7m.