Carluccio's (LON:CARL), the Italian restaurant and retail chain, served up a strong set of half-year figures today despite continuing economic uncertainty compounded by unhelpful legislative changes and fierce market competition. The Company now has 45 stores, having opened three new stores this financial year in Wimbledon, Exeter and Cardiff, and is due to open a fourth store in Milton Keynes in July. In the six months to the end of March, the group saw sales rise by 8% to £37.1m with pre-tax profits increasing by the same margin to £2.7m. Coupled with a £1m increase in the company's cash balance, this means that an increased interim dividend of 0.8p per share will be paid in June. The latest figures were welcomed by Carluccio’s finance director, Frank Bandura, who told Stockopedia News earlier that the company was confident of fending off market uncertainty with a flexible business model and continued expansion plans.
Q. You must be pleased with today’s interim results. What factors have been critical in driving the business forwards during the economic downturn?
We’re very happy with the results today. I think it is a good set of numbers particularly given the economic backdrop. I think also, apart from those economic conditions, if you look at some of the specific challenges we have had as a business in this sector (including changing legislation over the national minimum wage and VAT), we feel that what we have demonstrated is that we have a very flexible business model. With the national minimum wage, the legislation stopped companies like ours, where tipping is prevalent, from including tips in the calculation of wages that we pay our people. What that meant was that we had to go back to basics and really look at our menu, the raw materials that make up that menu, and the pricing. I guess you’d call it the value equation. By looking at that very closely, we managed to increase our gross profit margin by 1.1% to 72.3%, which funded the higher labour costs. And that’s what we mean when we talk about a flexible business model; it means that there is enough in there so that we can look at the ingredients we use, we can look at the dishes we have on the menu and we can look at the pricing. On the subject of VAT, when the tax was reduced we gave…
