Business booming for historic Spar operator - but talk of national insurance hike raises alarm
“We wouldn’t like to see any additional cost pressures by introducing extra taxes, such as raising employers’ national insurance” – Jim Hepburn, chairman
CJ Lang & Son, the venerable Scottish wholesale business and Spar convenience store operator, has given a “cautiously optimistic” outlook after booking strong full-year results, but warned of the potential fallout from any increase in employers’ national insurance contributions.
The latest set of accounts, for the year to April 28, show that group turnover was up 14.2 per cent to £253 million, compared with the year before, while pre-tax profits rose by 8 per cent to £4m - the sixth year of underlying earnings growth. During the period, the business, whose roots stretch back more than 100 years, added 12 stores to its own company portfolio - three former Eddy’s Food Station branches acquired from the administrator, together with the Scotfresh Group of nine convenience stores. The dozen outlets are being converted into the Spar Scotland branding.
The Dundee-headquartered firm, which employs more than 1,800 people, said it had continued to invest over the past 12 months, with major store refits at Kilwinning, Lawthorn, near Irvine, and Erskine. The rollout of its exclusive Barista Coffee offering, together with digital screens and electronic shelf edge labels are said to have helped “modernise the overall customer shopping experience”. The group’s head office in Dundee has also undergone a refit, “encouraging colleagues back into a modern, relaxed environment”.
Bosses also pointed to “significant” investment in vehicles, equipment and forecasting and demand planning systems to improve customer availability.
Chief executive Colin McLean said the firm had enjoyed “a good run” over the past financial year, completing some key investments and acquisitions and delivering “robust growth”. While remaining “cautious” for the remainder of this year and into 2025, he said there were “opportunities out there given the current market”.
He told The Scotsman: “We have a good distribution centre here in Dundee and we are making sure that we are taking our independent customers on the journey. Rising operational costs, combined with changing consumer habits and supply chain unpredictability are critical factors that will continue to shape the year ahead.
“It will also be interesting to see what the Budget does or doesn’t reveal. We are clearly in a cycle where there are a number of headwinds coming against us and we need to try and manage our way through and be as nimble and agile as we can be as a business.”
Prime Minister Sir Keir Starmer has not ruled out a national insurance increase for employers in the Budget on October 30. Employers currently pay the levy at a rate of 13.8 per cent on all employees’ earnings above £175 per week. The Labour Party’s 2024 manifesto ruled out raising the level of personal national insurance, income tax and VAT.
CJ Lang’s chairman, Jim Hepburn, said: “We wouldn’t like to see any additional cost pressures by introducing extra taxes, such as raising employers’ national insurance. That’s an additional cost of employment and consequently means that ourselves, and the retail sector in general, would have to look at how to mitigate that and look at productivity initiatives. That could impact on people’s jobs.”
The business shared its success to date and its plans for the future at a major trade show at the end of September in Aviemore. The event attracted hundreds of suppliers, independent Spar retailers and colleagues.
“We think it’s probably the biggest retail event in Scotland,” said McLean. “It’s a great opportunity to celebrate our success and make clear how we are going to take the business forward. It is also an opportunity to be open and honest about what we see are some of the challenges in the marketplace.
“Some supermarkets have been struggling. Since the pandemic, consumers have been moving away from online back to more traditional shopping routes, whether that’s the big shop or using local convenience stores more often.”
He added: “Theft has been well documented and is certainly a big issue. It’s almost becoming acceptable within society. The Scottish Government was certainly ahead of the game with the shop workers act but the issue is still taking up a lot of time and effort in certain stores. Making sure our staff are safe is paramount though.”
Hepburn said the dismal Scottish summer just past would likely have some negative impact on the current year’s performance.
“It’s a key trading period clearly in terms of the likes of ice cream and lemonade,” he noted. “If the sun doesn’t shine and the rain comes along then it’s going to have an impact.”
CJ Lang, which was founded in 1919, distributes to more than 300 Spar stores. It works with some 150 local suppliers across Scotland and in excess of 50 per cent of the products on its stores’ shelves are sourced locally. The firm’s carrier bag initiative has donated more than £1m to local charities and community groups since 2013.
McLean added: “Our stores serve communities of all sizes across Scotland; our customers are our neighbours. I would like to thank them, along with our suppliers, independent retailers and all our colleagues, for their continued support.”
Last month, rival convenience store business Scotmid notched up first-half growth despite the summer washout dampening customers’ willingness to spend. New chief executive Karen Scott, who recently took over from long-standing boss John Brodie, described the past few months as “challenging”.
Despite that, the co-operative business delivered a £2.1m trading profit for the 26 weeks ended July 27, a £600,000 improvement on the interim result for 2023. Total turnover was up by £2m to £214m.
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