There are still a few rays of sunshine among the black clouds of economic woe. Just ask Joe Morris, operations director of the Home Bargain discount chain.

HE CAN’T help smiling as sales soar and expansion plans are set to proceed at breakneck speed. I met up with him inside a giant 350,000 sq ft shed that has been constructed at company headquarters in Gillmoss to complement another monster of 300,000 sq ft, all designed to handle the business’s vast quantities of stock.

The family firm has grown progressively to 180 UK stores, but the new handling capacity has been created to cater for 350 shops.

But there will be no stopping at that point, as the plan is to drive on towards 500 stores, which means yet more warehousing space will be required.

Not bad for a business founded less than 40 years ago in Old Swan selling toilet rolls and odds-and-ends.

Although the three Morris brothers who run the chain had big ideas about how to develop the business, the recession has created even more demand than they anticipated from bargain-conscious shoppers.

Joe Morris said: “We have invested £35m in extra space, both in terms of the building and the technology which uses robots to handle the pallets. We currently have space for around 17,000 pallets but that will be going up to 60,000.

“We preferred to put up our own building, rather than rent, as it gives us much more control.The expansion is necessary to service the increased number of shops we plan to open over the next few years.

“We had this in mind four years ago, so it was pre-credit crunch, but that hasn’t deterred us from pressing ahead.

“It’s a big challenge and we have a fair way to go to reach 350 shops but there are lots of areas of the country that we feel will welcome the brand.”

The family’s confidence is certainly backed up by the figures. The current 25% year-on-year sales increase follows year-end results for 2008, which showed operating profit reaching £34.7m – a £5m increase on 2007.

Turnover has also demonstrated impressive growth, coming in at £383m, up from £322m in 2007.

This follows several years of sustained growth.

That trend looks set to continue with the recession pulling in ever greater numbers.

Morris continued: “If people are looking to save a few quid, we offer great value for money. And who isn’t, these days?

“People are living longer, so there are more pensioners, but at the other end of the scale you have people like students also watching the pennies.

“These sort of circumstances suit our business model, although we don’t have a typical customer in mind. We don’t do market research or anything like that, it’s just a matter of putting products on the shelves for people to buy them.

“However, that doesn’t make us complacent because every day is a challenge. We don’t have any direct competitors as such, but lots of people are looking at discounting these days, even businesses like Tesco, so you always have to keep on top of the business.”

He says the business is still relatively small in national terms, but the growth strategy will make them a bigger player in time.

The heartland for Home Bargains is the North-West, but the brand is also strong in the Midlands and has made in-roads into the North-East.

It is envisaged that many other regions will also be hungry for discounting stores.

Earlier this year, the firm made its first foray into Scotland, at Bathgate, in the Lothians, and intends to operate six outlets in the Glasgow area.

Former Woolworths stores that have been taken over are scattered around England and Scotland and locations include Oswestry, Blackpool and South Road, in Waterloo.

Products are frequently changed as new opportunities arise. The business takes lots of clearance lines and unused stock and because they take such big quantities they can strike some good deals.

And they also retain just 4,000 lines, compared with Tesco which has around 60,000. The low number of product lines means stock control is much more efficient. A recent survey showed that the chain is now the second biggest independent retail grocer with food and drink sales rising fast.

“We can take a lot of stock off people’s hands,” he added. “So we can pass on some real bargains to customers. Because we are a family firm, we can also make quick decisions when necessary.

“We also keep a very keen eye on costs. In this business, it’s very much about being lean and mean.” That frugal mindset also mean the company has managed its own affairs in a prudent way and is therefore is in a strong position in terms of its own cashflow and balance sheet.

Home Bargain does not rely on bank funding but has an excellent credit rating and when it does borrow it tends to pay off loans quickly. It’s a position many other firms would envy, and means other ways of raising cash are not necessary.

Morris explained: “We are in a very good position in not relying on banks, although we do have a very good relationship with our bankers.

“It also means that going to the market for a flotation is not on the agenda.

“As I said, we like to be able to control all aspects of the business without being beholden to shareholders.”

In January this year, the business announced it was acquiring 14 former Woolworths stores after the iconic brand collapsed into administration.

Since then, it has relocated its very first high street store, which opened in Old Swan’s Prescot Road, in 1979, to the nearby former Woolworths site, doubling staffing numbers from 15 to 30. Morris sees the irony.

He said: “We started in Old Swan 30 years ago, so I suppose it’s a bit like going back to the future. Woolworths, of course, seemed to be an unshakeable high street giant and competitor to what was then the Home Bargain minnow.

“Woolworths seemed to be in a different league all those years ago. This shows how the retail market can change because they were the sort of company that set the standards.”

There are still a couple of areas in which the company hopes to improve. Shoplifting continues to plague the stores, amounting to £6m a year, although there is still no intention to introduce security.

The hope is that competent staff will help combat the problem.

There is also no online presence although the firm did operate a website called halfpriceorless.com but that was closed six years ago.

Morris explained: “It’s something we may return to in the future but at the moment management time is focused. Besides which, a lot of our stuff, such as toilet rolls, doesn’t lend itself to being an online product.”

The ultimate aim for Home Bargains is to become a £1bn a year concern, which would catapult it into a major retail force. It is hoped that can be achieved by 2015.

One way the chain does stand out from the crowd is the attention to detail in terms of fitting out new stores. It’s not a case of a slap of paint and a new sign – each outlet receives a three-month £500,000 makeover.

Another unusual part of the business model is that the company does not advertise or use public relations to promote the brand.

Again, the emphasis is on keeping costs down and advertising is seen as an unnecessary extravagance.

Morris says the reputation of the business spreads by word of mouth, and the slogan “Top brands at bottom prices”.

It makes you wonder what effect advertising would have on the business. Morris said: “As I’ve said, for us it’s about keeping costs down and delivering quality products at value prices, and customers seem to appreciate that.”

Casting his eye over the wider economy, he commented: “There is a long way to go. At the moment, as a country, we appear to be in uncharted territory as far as the economy is concerned.

“The golden age of cheap credit is over and it has been a tremendous reality check for everyone.

“It’s difficult to know where it will end, but the current bite is likely to last years. We are in as good a position as anyone to weather the storm.”

TJ Morris was established over 30 years ago by Tom Morris. Since opening his first store in Liverpool, he has grown the business organically to become one of the biggest privately owned companies in the country.

The company now boasts over 170 stores and employs more than 4,000 staff. It is widely regarded as one of the largest businesses in Merseyside with its long-term plans including the employment of 12,000 people.

After our chat, Morris announced that he was on a tour of stores in the North-East the following day. Although his visit is in the business diary, he admits to sometimes calling in at some stores incognito to check whether everything is as it should be.

Outside of the business, TJ Morris is also actively involved in supporting enterprise in schools and colleges.

As well as financially supporting a number of schools, the company works closely with them to provide practical business experience.

Morris also sits on the Advisory Board of the University of Liverpool’s School of Management and the company has also been a leading supporter of an initiative called the Enterprise Game.

Developed in conjunction with Halton Borough Council, the game aims to develop entrepreneurial skills in young people.

Players run their own business and must use their new skills to try and make their enterprise as successful as possible.

Morris explained: “We support a range of community organisations and projects. Our focus is on enriching the lives of local people.”