Cost control helps Laurus back into the black

Related tags Cost Laurus

Tighter cost control helped Dutch retail group Laurus return to the
black in 2003 despite the retail price war which broke out in
October.

The company, which is partly owned by the Casino group in France, said that operating profits reached €27 million in 2003, a major improvement on the losses of €2 million a year earlier, as its restructuring programme helped reduce back office costs.

The sale of its loss-making Spanish business in 2002 also contributed to the company's performance, as did the disposal of a number of Belgian stores during the year. The adverse effects of the price war were also offset by operating efficiencies and the improved performance from a number of stores after converting to a more price-driven format.

Sales dropped from €5.5 billion to €4.1 billion during the year, mostly as a result of disposals but also due to low levels of consumer spending in the Dutch market, the principal reason for the price war.

While the company made huge improvements in most areas in 2003, its overheads and logistics costs remained high, and the company said that it planned to take further action to improve these areas in 2004.

But most of Laurus' activities in the current year will focus on its stores. Price reductions, a new discount own label (in conjunction with Casino) and a major refit programme are all planned for 2004.

But with the price war expected to continue for some time, Laurus' continued profitability in 2004 is by no means guaranteed, and further cost control, especially at its loss-making Konmar unit, is vital.

"In 2004, food retailing will most likely face lower margins,"​ the company said. "This means that Laurus will have to control operating costs even more tightly. Consequently, further cost savings will be needed, in addition to the cost cutting measures already announced."

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