Retail round up
better-than-expected results for the 2003/04 financial year after a
predicted price war failed to materialise.
Consolidated net profits for the year rose by 38.8 per cent to €186.5 million, on the back of a 22.7 per cent increase in sales to €3.86 million. While some of the increase in turnover came from the Spar chain and Battard shops acquired from Dutch group Laurus, the company also performed well on a like-for-like basis, lifting sales by 11.5 per cent.
Meanwhile, in the UK, the closure and refitting of a number of stores continued to boost the performance of Somerfield, the once-beleaguered high street retailer. The company reported a 60 per cent rise in profits to £41.1 million, helped by a 1.1 per cent increase in like-for-like sales.
Indeed, the company, which fought off a hostile takeover bid last year, continues to improve, with like-for-like sales in the first few weeks of the current financial year up by 2.7 per cent as the impact of refitted stores - and an acceleration in the pace of investment - continued to be felt.
Notwithstanding the continued sluggish performance from Kwik Save, the discount chain, the company is confident of further gains this year, aided by the recent launch of a new loyalty card and the decision to move into the fast-growing convenience store sector through the acquisition of Scottish group Aberness.
Somerfield's compatriot Morrisons started the year with an even better performance - it reported a 15.7 per cent increase in sales for the first 21 weeks of fiscal 2004, or 9.2 per cent on a like-for-like basis.
Immediate moves to reduce prices at the Safeway chain acquired in the spring took their toll on turnover at the business, and year-to-date sales in like-for-like Safeway stores were down 7.2 per cent, the company said.
The four Safeway stores converted to Morrisons' format are already performing well, with sales up 36.8 per cent on average, and the company will hope for a similar upturn in performance once the full conversion programme begins in August at a rate of three a week.
Despite this, the company warned that profits this year were likely to be below market expectations as it took longer than expected to se the benefits of cost savings at Safeway.
