Clipper Logistics expects much higher earnings after winning brace of big contracts

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Clipper Logistics PLC (LON:CLG) said it expects to materially outperform market expectations for the next financial year and beyond after winning big new contracts with retailers River Island and Mountain Warehouse.

These contract wins represent a “significant step change in activity levels” and will increase revenue by over £40mln on a full-year basis.

READ: Clipper Logistics expands European footprint with new e-commerce operation

Earnings will be immediately enhanced in the new financial year that begins on 1 May, the company said.

Building on an existing product returns contract for River Island, Clipper has agreed an extended five-year open book contract to handle the full range of logistics operations for the fashion retailer, including warehousing, distribution to high street stores, and e-fulfilment and returns management services.

Using state of the art logistics and warehouse management technology, Clipper said it will kick off “a transformational programme to drive the customer’s operations forward, developing an integrated omni channel solution, and driving greater efficiency through the use of automation and robotics”.

The expanded River Island contract is planned for a mid-2021 start.

With Mountain Warehouse, Clipper has signed a new ten-year open book contract to provide a full range of multi-channel logistics services for the outdoor activities retailer, starting in the spring.

The contract, where roughly 220 staff will be employed, will also see investment in automation and robotics to increase capacity and allow further growth for the customer, and the new contract will operate from Clipper’s existing Peterborough distribution centre seven days a week.

River Island chief executive Will Kernan said: “We are excited to be extending our existing partnership with a world class logistics operator like Clipper, who have the expertise to deliver a significant, fast-paced programme of change that will support our omni-channel strategy and growth ambitions. Our brilliant distribution centre workforce will remain in place and, with Clipper at the helm, we are confident that our logistics operations will become even more future proof, more efficient and more flexible.”

Marcus Ward, chief operating and financial officer of Mountain Warehouse, said: “We have been impressed with Clipper’s innovative thinking and track record. The engagement from Clipper’s senior team from an early stage and Clipper’s proven ability to meet our high standards, has given us with the confidence to enter into a long term partnership.”

Steve Parkin, executive chairman of Clipper, said: “Both contracts are a clear indication of the collaboration and use of shared resources that will define the retail logistics supply chain into the future.

“These contracts enhance our command of the end-to-end service proposition in online retail, and demonstrate that Clipper is also well-positioned to continue to support high street retail as it recovers from lockdown.

“Our strategy to focus on providing innovative solutions in both the online and traditional bricks and mortar retail landscapes continues to drive value for both our customers and shareholders.”

He said a further update on earnings expectations for the year to end-April 2022 and beyond will be provided in due course.

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