Scotmid Co-operative has announced a £4.8m trading profit, for the year to 28 January 2018, “despite unprecedented external cost increases”.
It says the figure, down from £5.3m the previous year, was helped by “solid sales growth and tight cost control”, which offset the majority of the £2m above-inflation costs faced by the society.
These include the National Living Wage, the Apprenticeship Levy, rates revaluation and pension costs, against the backdrop of “the perennially challenging retail market”.
After the sale or closure of some loss-making stores, turnover fell £2.5m to £374m, but Scotmid says underlying like-for-like turnover growth remained strong.
It added: “A very successful diversification of our property investment portfolio and a strong residential property market in Edinburgh helped the society’s asset base to grow by £8m, re-enforcing the strength of the society’s £99.6m balance sheet.”
Chief executive John Brodie, said: “Over the past year, the society has faced an avalanche of cost challenges and difficult economic circumstances.
“We have responded with a strong performance – driven by innovation underpinned by a continuous improvement philosophy in all our businesses.
“The society’s retail businesses continue to overcome those challenges with Scotmid’s food stores adapting to the ever-changing needs of customers through a programme of differentiation by driving significant growth in our food-to-go operation and a continuing emphasis on local sourcing.
“Semichem sales and cost initiatives helped to mitigate the pressure on margins from the weaker pound in the poor non-food market for retailers. The closure of loss-making Semichem stores and the trial of a new concept store represented an initial step to realign the business and provide a sustainable solution to the challenges in today’s retail market.”
Mr Brodie said the society’s property business had another good year thanks to rental income growth and the sale of a large property in Edinburgh and subsequent reinvestment into other properties, which was “a significant step in line with our diversification strategy”.
The society’s funeral arm produced an improved performance over the second half of the year.
Scotmid extended its Community Connect initiative, which supports good causes from the carrier bag levy, into its West Member Region, after trials in the North. will roll out in the East this summer.
Mr Brodie added: “I expect 2018 to be yet another difficult year for retailers generally with ongoing structural changes and no significant easing of cost challenges and more regulatory changes.
“The resilience we have shown over the last few years will continue in 2018 as we tackle both new and existing challenges, using our continuous improvement philosophy.”
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