Big Yellow announces 22% growth in profits

A 22% growth in profits before tax on the previous year was the headline result from Big Yellow’s 2011 annual report.

The company, Britain’s leading self storage firm, was able to announce a very impressive set of achievements which indicate how far it has come since the recession of 2008.

Big Yellow Self Storage: The results are in

One of the main highlights from the Big Yellow results was the continued growth in store occupancy, which expanded by 215,000 square feet in total across all of the company’s 63 sites.

The equivalent figure for 2010 was only 140,000, indicating how strong the recovery in demand for self storage space was this year, particularly in London and the South East, where the majority of Big Yellow’s facilities are located.

As well as increasing the amount of space they rented to customers, Big Yellow also managed to achieve growth in its programme of gradual rent increases. The average person storing with Big Yellow is now paying £26.82 per square foot a year, which is an increase of 2% on the rate they were paying last year.

Big Yellow’s chairman, Nicholas Vetch, says in his statement at the beginning of the annual report that the company will be deliberately pursuing a strategy over the next couple of years of increasing occupancy rates within its self storage facilities rather than trying to extract the highest possible rents from consumers, as they feel this is where the greater opportunities for growth lie.

The company’s shareholders also enjoyed good news – earnings per share were up 19% on the year before, allowing Big Yellow to grant a dividend of 9p per share, 5p more than in 2010.

Total self storage facility revenues of £59.6 million were 8% higher than last year.

Falling number of house moves

Mr Vetch said he was particularly pleased with the growth his company had achieved this year, as it continued to operate in the difficult conditions caused by the broader economic recession and the fall in the number of people moving house.

Big Yellow derives a large proportion of its customers from people storing their possessions while moving house, so the business is feeling the effects of only 47,000 mortgages per month being approved last year, compared to a 20-year average of 89,000 approvals per month.

Self storage sites

Big Yellow opened only three new self storage facilities during 2010 in response to the difficult trading conditions

Between them these gave the company a total of 193,000 additional square feet of space split between the sites in Eltham, Camberley and High Wycombe. Big Yellow also has a further six sites in development, five of which already have planning consent. Construction has begun at two of them, in Chiswick and New Cross, while the other three sites in Enfield, Guildford and Gypsy Corner will all be developed during the next three years.

Sites in Clapham, Richmond and Blackheath were sold during 2010 as the market conditions were no longer considered favorable enough to justify opening new self storage facilities there.

Interestingly, the report also points out that London and the South East remains the core of Britain’s self storage network, as this region contains 79% of Big Yellow’s stores and generates 89% of the company’s revenue.