Supermarket suppliers are used to being squeezed, judging by Tesco’s actions as revealed by its recent accounting problems. And with the big four grocers cutting prices to compete with the discounters, the likes of Mr Kipling cake group Premier Foods face growing pressure on their margins. Premier has radically restructured, raising £353m, refinancing its debt, creating a joint venture for Hovis and beefing up its management team. But its shares have slumped by nearly three quarters since the March refinancing on concerns about trading.
The second quarter saw a 6.3% fall in revenues, but Clive Black at Shore Capital expects an improved performance when the company reports third-quarter figures on Thursday. He forecasts a 3% to 4% decline, helped by favourable weather in August and September and product launches backed up by more advertising. Premier has even put Homepride back on TV for the first time in a decade, although anyone who has seen the ads – with its mascot Fred as a six-foot puppet rather than a cheeky cartoon character – might find them more offputting than conducive to buying flour.
