United Kingdom

MIDAS SHARE TIPS: In Supreme good health

Sandy Chadha did not do well at school. Subjected to bullying and stymied by dyslexia, he left with no qualifications and joined his father's firm, Supreme, selling radios and watches in Manchester. 

That was just over 30 years ago – and the business was struggling. Today, Supreme turns over more than £120million a year, it is valued at £220million and Chadha is determined to turn it into a £1billion business, following a listing on the London Stock Exchange's junior AIM market in February. The shares are £1.87 and should increase substantially in price as Chadha strives to achieve his ambition. 

Chadha's big break came in the early 1990s when he started selling batteries. Whereas watches and radios were only stocked by certain retailers, batteries could be found in shops large and small, from corner stores to major DIY groups. Chadha sold his wares to as many as he could and Supreme prospered. 

Spending a fortune: Supreme's latest, and perhaps most ambitious, venture is a foray into the world of vitamins and wellness

The group then moved into licensing, signing contracts with the likes of Philips and JCB so batteries could be sold under these well-known firms' names. The deals, which persist to this day, give consumers the comfort of buying branded goods at a cut-price rate. 

The idea worked so well that Chadha moved into lightbulb licensing, with firms such as Eveready and Energizer. Today, Supreme sells more than 1,000 products under licence to thousands of stores, including discounters such as B&M and Home Bargains, as well as supermarkets such as Tesco, Morrisons and Asda.

Some business owners would have been happy to stop there. But Chadha is a born entrepreneur and, in 2014, he came upon vaping, at that time still in its infancy. Calculating that this was another area where he could make a mark, Chadha decided to create Supreme's own brand, 88vape. 

The group is now a leader in the field, with 30 per cent of the market and growth of more than 10 per cent per year. From its headquarters in Trafford Park, Manchester, Supreme churns out about 300,000 bottles of vaping liquid a day, helping millions of smokers quit the habit. 

Supreme even counts the Prison and Probation Service as one of its leading customers. After a ban on smoking in jail sparked riots among nicotine-addicted convicts, the service agreed to allow e-cigarettes. With almost 100,000 inmates across the UK, at least 80 per cent of whom would count themselves as smokers, demand for vaping products is huge and prisoners' brand of choice is 88vape. 

Supreme's latest, and perhaps most ambitious, venture is a foray into the world of vitamins and wellness. British consumers were spending a fortune on vitamins and supplements even before the pandemic. Now they are buying even more, with sales of almost £1billion expected this year. 

Star supporter: Davina McCall promotes Supreme's vitamins

Most of these pills and potions are vastly overpriced, so Chadha felt that the market was ripe for revolution. Having set up an online business for 88vape, he has done the same with vitamins, offering a year's supply of popular vitamins in plastic-free pouches for just £5.

The company has created its own wellness brand, Sealions, and sales are growing at more than 30 per cent a year. Protein shakes and bars are on the agenda too and Chadha confidently expects to create a thriving online health shop in the next couple of years. 

At the same time, the company is launching a vitamin range for its retail customers. Known as Millions & Millions and fronted by TV personality Davina McCall, the brand is already on offer at discount stores and should be rolled out more widely later this year. 

To some observers, Supreme may seem to be moving too fast and in too many directions. But the group's results are strong and brokers are optimistic about the future. 

Turnover in the year to the end of March 2021 rose 33 per cent to £122million and the group is forecast to generate sales of £128million in this financial year, rising to £137million in 2022-3. 

Pre-tax profit fell slightly year on year to £13million, largely on the back of costs related to the listing on AIM in February, but the figures are expected to bounce back strongly. Supreme also intends to pay a dividend in this financial year and brokers have pencilled in 6.6p, rising to 7.6p the year after.

Midas verdict: Supreme has grown steadily for three decades, never making a loss and borrowing almost nothing from the bank. But the best is yet to come. Chadha, who is in his early 50s, is a man of formidable energy and drive, his team is well chosen and the listing on AIM gives the business further impetus. At £1.87, the shares are a buy. 

Traded on: AIM Ticker: SUP Contact: supreme.co.uk or 0161 872 5151

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