Delivered wholesaler Kitwave Group has warned profits fell short of expectations in the three months to 31 January after weaker hospitality demand and rising costs hit margins, despite stable overall revenues.
In a trading update covering the first quarter of its new financial year, the AIM-listed group said revenue was in line with the same period last year. However, lower-than-expected sales to hospitality customers resulted in an “unfavourable revenue mix”, which reduced gross profit margin.
Profitability was also weighed down by continued investment in its South West depot and inflationary pressures, including higher National Insurance contributions and increases in the National Minimum Wage.
As a result, adjusted operating profit for the period was “materially behind the Board’s expectations”.
Kitwave cautioned that margin pressure is likely to continue, with the board expecting these challenges to persist throughout the rest of the financial year ending 31 December 2026.
“The Board remains cautious on the outlook of the Group for the remainder of the financial year,” the company said.
The group, which supplies around 46,000 mainly independent customers including convenience retailers, foodservice operators and leisure outlets, noted that the November-to-January period typically accounts for only a small share of annual profits.
Kitwave has grown significantly in recent years through acquisitions in the fragmented UK wholesale market, alongside organic expansion. In its latest full-year results for the 12 months to 31 October 2025, it reported revenues of £802.7 million, up 20.9 per cent, and pre-tax profit of £22.4m.
The update comes as Kitwave remains the subject of a recommended takeover by Kite UK Bidco, a vehicle backed by OEP Capital Advisers, which in January agreed a £251m all-cash deal valuing the wholesaler at 295p per share.