Holland & Barrett Group has vowed that its Julian Graves chain will be profitable in the 2010/11 financial year as it gears up to revitalise the business.

Holland & Barrett chief executive Peter Aldis said the integration of Julian Graves is progressing well, and will become “a specialist foods retailer - slightly quirky and known for product innovation”. Julian Graves was bought by the group’s parent company, NBTY Europe, in September 2008 from Icelandic retail investor Baugur.

For the 18 months to September 30, 2009, Julian Graves reported an operating loss of £11.8m. Aldis said the chain was a “bag of spanners” when the group bought it, and it then had to wait until the deal was cleared by the Competition Commission in July last year before starting the integration.

The group has since earmarked around 100 of the 345 Julian Graves stores to be converted to Holland & Barrett or its sports nutrition fascia GNC. Next month it will close the Julian Graves head office and DC in Kingswinford, in the West Midlands, and will integrate the functions with the Holland & Barrett office in Nuneaton, and DC in Burton. All staff were given the option to move, but around 80% of the workforce - around 100 people - chose to take redundancy instead.

Aldis said Holland & Barrett is currently carrying out market research to find out what customers want from the Julian Graves brand.

He said Julian Graves is “not a health food retailer” like Holland & Barrett, but that it sells “retro confectionary and baking ingredients, for example, which nobody really knows about”.

Aldis will present the new brand to the staff at a conference in September. He said that the Holland & Barrett chain will open around 30 shops this year to add to its 600-strong portfolio. He added that like-for-likes are up 3.5% in its financial year to date, which began in October.

It will also open two more of its new concept stores. These will open in Cheltenham and in London, in the City. The first opened in Bury St Edmunds in February. The new stores will feature an expanded toiletries offer, a food-to-go section and coffee shop.

Holland & Barrett will expand its Dr Organics range in September.