Edeka reaps rewards of restructuring
turnover for 2003, a good performance in a market still struggling
to lift itself out of recession. The improvement came as a result
of the company's major cost cutting programme over the last year.
Sales through Edeka banner stores in 2003 were 2.9 per cent higher at €24.6 billion, while group turnover was 2.4 per cent higher at €31.27 billion, including revenues from the company's AVA subsidiary and its share of sales from a joint venture with the Globus Group.
As well as owning its own stores, the company operates as a wholesale supplier for a number of independent retail outlets, and sales through this type of outlet increased by 2.3 per cent to €9.67 billion in 2003. Independent stores are likely to play a more important role in Edeka's business in the future, the company said, with around 1,000 outlets currently run directly by the group expected to be converted to franchised outlets over the next few years.
Centrally-operated stores, meanwhile, saw their sales drop by 0.2 per cent to €7.98 billion. Edeka's cash and carry business posted a 27.5 per cent increase in sales to €1.58 billion, while the group's baked goods retail chain posted a 5.8 per cent increase in sales to €420 million.
At the profit level, the company reported pre-tax earnings of €442 million, an improvement on the previous year of around 20 per cent as a result of cost reductions and improved buying terms.
Alfons Frenk, group chairman, said that there were no plans for major store closures in 2004, although some 400 outlets were closed in 2003. The group also opened some 220 new outlets last year, however, leaving it with 9,100 stores, of which 6,500 of which are franchised.
The programme of cost reductions is continuing throughout the Edeka business, with some €250 million expected to be saved this year from the administration and logistics functions alone. A similar amount has already been culled from the group's store operations.
