Strong performance at Tuffnells boosts Connect Group revenues

Tuffnells Parcels Express contributed £114m of revenue and £9.7m of operating profit to its new owner Connect Group in the year to the end of August, group chief executive Mark Cashmore has revealed.

The parcels firm - which Connect Group acquired in November last year and subsequently said was exceeding expectations - put in a “really strong performance” in the eight months to the end of the financial year, bringing on around 1400 new customers, growing business from existing clients and driving through a 2%-plus rate increase in March, Cashmore told Motortransport.co.uk.

Connect Group announced a 3.7% rise in group turnover in the year to the end of August to £1.87bn (2013 £1.8bn), around £1.5bn of which was generated by its Smiths News newspaper and magazine distribution business.

Profit before tax, however, fell nearly a third to £29m (£43.1m), which Cashmore said reflected the costs of the Tuffnells acquisition.

Cashmore said it had been “a transformational year” for Connect Group between the Tuffnells acquisition and the growth of the Pass My Parcel operation, the click-and-collect service offered in partnership with Amazon, that provides online purchasers with same-day parcel collection via newsagents and convenience stores. Over 3,000 retail outlets were involved in the service at the end of August.

The Pass My Parcel operation now involves over 3,200 stores and is handling “tens of thousands of parcels a month”, he added.

“Volume is continuing to grow,” he continued. “Since the start of September it’s been growing at 10-20% week on week and clearly, we expect that volume to grow further as we get into the peak seasonal trading period and as we bring on new clients and provide new services.”

Those new services include a paperless returns service for consumers which Connect Group expects to confirm in the next two months.

Connect Group also intends to expand the number of stores involved in its Pass My Parcel operation to 5,000-6,000 in the next year to provide a full national offer, said Cashmore.

At the moment, all Pass My Parcel deliveries are undertaken by Smiths News but as the operation is expanded, it is possible that the Tuffnells operation will become involved, he confirmed. “In those areas where we don’t supply newspapers and magazines, we are looking at how we fulfil that last-mile distribution and clearly, Tuffnells is one of our options.”

Cashmore added that no rationalisation had taken place at Tuffnells since the acquisition and that growth of the parcels business was still very much on the agenda.

“We’ve opened another two depots, in Norwich and at Coalville, near Leicester, in the last month and we’re continuing to grow the business in terms of the network itself and taking on staff, including drivers, to support that expansion,” he said.