Dry cleaning still has growth potential for Johnsons
16th October 2009

THE introduction of new services and ongoing switch to green branding will drive the growth of Johnsons dry cleaning business, according to its boss John Talbot.

Despite the dry cleaning brand being the most well-known within Runcorn-based Johnson Services Group, it only accounts for around 35% of the business, and somewhat less as a percentage of operating profit.

But the dry cleaning side is still a very important part of the group as its core to what we are doing in the group, John Talbot, executive chairman of Johnson Service Group, told TheBusinessDesk.

Mr Talbot admitted that the performance of the dry cleaning business had been impacted over the year and was down around 5% on a like-for-like basis.

But thats not bad when you look at retail generally, he added.

To boost performance, the group is introducing extra services through the shops such as domestic laundry, washing and ironing.

Thats adding 2% to our volume, whereas last year it would have been about 0.5%, and the move to Green Earth will increasingly have an impact, said Mr Talbot.

The group has been replacing its dry cleaning chemicals with a new product called Green Earth, which is based on silicon and is more environmentally friendly than traditional dry-cleaning chemicals, according to the company. Of Johnsons 520 dry cleaning shops, around half are using the new technology.

It costs between 10,000 and 15,000 to change each shop front to reflect the changes but Mr Talbot expects around 90 to have the new Green Earth branded shop fascias to match by the end of this year.

Weve been moving the group across to that for a number of years but people didnt know about it. It was an internal process and customers would only have noticed from the change in smell. But we decided to start publicising it and the benefits.

Customers are responding and we are seeing increases in sales where there is that green branding, said Mr Talbot.

As leases come up for renewal, the group is re-evaluating some of its locations and it closed 30 stores last year, and 25 this year.

But at the same time we are opening up another nine this year, said Mr Talbot.
He added that the company was looking at locations that work as drive-ins, such as old petrol and service stations, as well as at units within supermarkets.

Parking seems to be important [to customers] as does the ability to get to and from the location. Thats why our locations are in supermarkets, or adjacent to supermarkets or in drive-ins. We will still open in the high street, if customers can park nearby.

The groups textile rental division, which includes Johnsons Apparelmaster and Stalbridge Linen Services, is its most successful, accounting for more than 50% of turnover.

Thats been very successful and we are looking to grow it as its the most profitable business, said Mr Talbot.

Meanwhile, facilities management, which makes up the remainder of the business, has benefited from the recession to a degree because businesses see outsourcing as a way to save on costs, according to Mr Talbot.

But to counter that, customers are being more restrictive with what they spend, he added.

In September the group announced that it had returned to profit, following a round of cost cutting measures last year, which meant it could pay a dividend for the first time since 2006.

Pre-tax profits for the company stood at 5.4m for the year to the end of June, compared with a loss of 7.5m a year earlier. However, turnover was down 7.7% to 120m compared with 130.1m a year earlier.

The company has reduced its net debt to below 70m. Its bank facility, which runs to December 2010, stands at 104.5m and will reduce to 98.5m by the end of the second half.

Mr Talbot said: Everybody can see the business is profitable and stable again, thats why we introduced the dividend.