Scotmid reports £2m profit for the first six months of the year

Scotmid co-operative has achieved a trading profit of £2m for the 26 weeks ended 30 July 2016. The figure is in line with the same period last year. The society’s interim report also reveals a turnover of £185m – £4m more than in the same period last year.

Chief executive John Brodie says the half-year performance is “positive” in the context of price deflation, the uncertainty caused by Brexit and the introduction of the National Living Wage.

“Against this background and that of a declining Scottish market our retail trading businesses delivered good performances. The Scottish Retail Consortium reported a 1.6% average reduction in like-for-like sales in the six-month period. In this context our food convenience business performed well, with turnover growth driven by differentiation initiatives such as bakery and food to go helping to offset the market decline,” he said.

Scotmid runs 350 retail and service outlets across Scotland, Northern Ireland and the north of England, including food, Semichem, funeral branches, post offices and a property division. Its asset base totals £91m.

The half-yearly report highlights that the non-food retail market in Scotland was “even more challenging than food”. In response, the co-op has focused on a shift with emphasis on fragrance and the introduction of new private label ranges, combined with discounted customer offers. Throughout the six months, Scotmid has also invested in mini refits and asset renewal as well as upgrades to IT systems and warehouse security enhancements.

Mr Brodie explained: “Our Semichem stores found it more difficult to counter market factors but still delivered a positive sales performance ahead of the market. This included the benefit of further growth in premium fragrance sales building on the success of last year.”

Scotmid’s funeral business also saw an increase in the number of funerals conducted.

“The funeral business performed ahead of expectations when compared against a particularly strong first half last year and taking into account increased competition in many of the areas in which we operate. Rental income from Scotmid’s property investment portfolio was also robust, particularly for our residential property, which helped to offset the additional cost burden arising from the increase in Scottish business rates for vacant property,” added the chief executive.

In terms of membership, the society has focused on mobile technology, launching a new free membership app, which delivers news, special offers and information about Scotmid events. The year 2016 also saw the co-op achieve the Fair Tax mark.

Mr Brodie said the society expected uncertainty within the general market to continue until the UK’s terms of exit from the EU became clear.

“Consequently, we expect the second half of 2016 to be equally or more challenging with the full cost impact of the National Living Wage. This will also continue into 2017 when we face further cost increases including the apprenticeship levy. The economy and in particular the unfavourable retail landscape will be a significant on-going challenge for the Society which we will continue to address with our continuous improvement philosophy which has served us well for a number of years,” he said.