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Clipper Logistics providing all-round service to retail sector

Snapshot

Agility really has been a hallmark of the company, which sees itself more a consultant and advisor to its customers than simply a third-party logistics company

Clipper Logistics PLC -

Quick facts: Clipper Logistics PLC

Price: 450 GBX

LSE:CLG
Market: LSE
Market Cap: £457.66 m
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Clipper Logistics PLC (LON:CLG) describes itself as ‘agile and able’, and this has been illustrated during the coronavirus lockdown by how it has supported clients.

Focused on the retail sector during normal times, it has delivered all manner of other products in recent weeks, including bread.

And last month it joined the huge logistical effort to get personal protection equipment to the doctors and nurses on the NHS frontline.

Agility really has been a hallmark of the company, which sees itself more a consultant and advisor to its customers than simply a third-party logistics company that carries assorted goods from one end of the country to the other.

That might sound a bit grand. However, Clipper appears really to have thought hard about the value-added services it provides.

Retail focus working 

One of the first decisions the group made early on was to focus on retail.

“Our view was we’d rather be an expert in one field, which has served us well,” explains chief executive Tony Mannix. “And when the industry started to evolve to online in 2005/6 that gave us a great opportunity to speak to our customers about helping them on that journey.”

So, what does that help look like? Initially, it started with sharing best practice and problem-solving for young businesses struggling with strains and pains of exponential growth.

Clipper’s philosophy of pairing larger companies with smaller firms on collaborative shared-use sites has been shown to benefit both sides. For the latter, it’s watching the big boys work, while blue-chip businesses often appreciate the cost benefits of splitting bills, Mannix says.

Some of those fledgling businesses that the firm worked with from the outset have now morphed into operations of significant scale that have stayed loyal; the Clipper CEO cites retail names such as PrettyLittleThing and Mint Velvet as prime examples.

Boomerang returns 

Commercially, the company, which employs around 8,000 people at peak times, has broadened its offering to provide support to the likes of ASOS and Superdry that deal with thousands of returns daily.

So, its Boomerang service will repatriate the clothing in resale condition quickly and efficiently, improving cashflow and reducing working capital.

It also acquired two warranty electronics repair businesses that can mend household products and even sell them on via online shops or on eBay.

And it provides the logistical backbone for John Lewis’ click and collect service.

Clipper’s deep expertise in the retail ‘vertical’ is now evident in its three-pronged business model. So, it earns what Mannix describes as a “base margin” for storing and shipping goods for customers from Asda through to Armani.

It then receives an “additional margin” for hitting service level agreements and key performance indicators.

Beyond this, Clipper, which operates 48 sites across Europe, has created what it calls gain-share contracts that allow it to generate additional revenues by finding efficiencies for customers.

All-round service

This all-round service has meant that contracts that might have started out as basic three-year deals have run on far longer thanks to that emphasis on serving the customer, says Mannix.

Its last results – the interims in December – revealed a company firmly in growth mode with revenues up 11.7% at £255mln, while underlying earnings before interest and tax were up 26% at £13.5mln.

So, will the coronavirus be a blessing or a curse for Clipper? “As Covid has forced people onto the internet those who were casual users in the past have now become very active as this is the only way to buy products in some cases. But shopping is a social activity and there will be some sort of return to normality.”

However, the lockdown adversity has shown his team at their very best, Mannix says. “In all of this I have been humbled by the level of support the teams have given our customers. We have had some excellent feedback from some saying that if they weren’t part of the shared use, collaborative capabilities of Clipper they would have struggled.”

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