A major fire that destroyed ArrowXL’s Worcester hub, combined with a “deteriorating” retail environment, dealt a body blow to the company’s pre-tax profit last year.
Reporting its annual results to 30 June 2018, the Yodel sister company, which specialises in two-man delivery and installation services, unveiled a 70% plunge in pre-tax profit to £862,000 (2017: £2.9m).
Annual turnover also declined in the period to £78.1m (2017: £82.6m).
In its strategic report to the results, the company said that the business had been affected by “the market wide deterioration in the retail environment and the impact of the April 2017 fire at the Worcester hub”.
The Worcester hub handled 43% of the operator's delivery volume ahead of the catastrophic fire in April 2017. Costs incurred due to the fire and subsequent disruption amounted to £2.7m (2017: £1.8m) recognised in the results as an exceptional item.
It added that while losses from the fire were insured, “a number of clients” had diverted volume to other carriers until it fully restored network capacity in January 2018. It did this by opening a temporary hub in Chepstow soon after the disaster, which will close when Worcester reopens, and adding a medium-term replacement site in Droitwich in September 2017.
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ArrowXL said that its customer base continued to be “hugely supportive,” adding that there are no “ongoing service issues” from the fire and pointing to its high Trust Pilot score of 9.4 in December 2018 as evidence of this.
Looking to the future the company said EBITDA for 2019 “will show “significant improvement”.
ArrowXL is planning to hold a reopening ceremony at its rebuilt Worcester hub this September.
The company was approached for comment.
