Scotmid Co-operative has reported an operating of £9.7m for the year ending 28 January, despite “a period of unprecedented uncertainty”.
This is up from 7.8m on the previous year as the society’s annual report welcomed a “strong underlying performance” and a healthy balance sheet, with assets in excess of £91m. Turnover rose by £6m to £376m.
Convenience stores achieved like-for-like sales growth despite a “lacklustre” retail market, thanks to “innovation and new initiatives” including a revamped food-to-go offer. The society continued its investment in its stores, including new self-scanning checkouts and a Post Office network transformation programme.
The business offset “significant cost increases” from the National Living Wage through store efficiencies but the report warns of “an ongoing challenge, with retailers facing increased cost from the apprenticeship levy, business rates and wage inflation”.
The non-food Semichem business also encountered a “very challenging market” but performed strongly and carried out improvements including mini store refits, counter replacements and security tagging. Semichem also invested in new warehouse picking devices and its vehicle fleet is being upgraded to improve its carbon footprint.
The society has been negotiating with landlords to achieve affordable rents for its stores but was forced to close Semichem stores in the year “where agreement on a fair rent could not be reached”.
In Northern Ireland, Semichem stores experienced strong sales growth, assisted by the currency devaluation.
Now in its 90th year, Scotmid Funerals continued to grow and respond to increased local competition. Two new funeral offices were opened in Livingston and another in Edinburgh, and there was continued investment in infrastructure and the vehicle fleet.
The society’s property business had another positive year mainly due to rental income growth. Commercial portfolio income remained ahead of the previous year, and the society added to its residential portfolio with the acquisition of a block of 15 two-bedroom flats in Hamilton.
An improvement in the residential market and successful lease negotiations saw the like-for-like valuation of the investment property portfolio increase by over £5m.
But a fall in long-term interest rates following the EU referendum saw Scotmid’s pension scheme deficit increase by £7.5m.
Chief executive John Brodie said: “I expect this political and economic uncertainty to continue in 2017 as the United Kingdom negotiates the terms of exit. Additionally, the ongoing cost challenge of the National Living Wage will be magnified by further costs arising from the apprenticeship levy and the recent rating revaluation.
“Consequently, 2017 will be another challenging year. In response to this generally unfavourable background, Scotmid will continue to seek out new sales initiatives or innovative cost control measures as part of our continuous improvement philosophy.”
The society is also working on an enhanced community strategy and a new five-year membership strategy, with a ‘Community Connect’ initiative being trialled to re-enforce the link between our membership offer and Scotmid’s community work.
In this article
- Annual results
- apprenticeship levy
- challenging market
- chief executive
- chief executive john
- chief executive john brodie
- executive john
- executive john brodie
- john brodie
- living wage
- national living
- national living wage
- previous year
- sales growth
- semichem stores
- vehicle fleet
- very challenging
- very challenging market
- United Kingdom