Chelmsford Star sees profits down in challenging retail market

'The board continues to regularly review the trends ... and implement strategies where possible to address the issues'

Chelmsford Star has announced a trading profit of £754,849 for the year to 25 January 2020, down from £900,779 the previous year.

Gross profit was £23,985,000 – a 1.68% drop from £24,394,000 in 2018. But gross takings saw a year on year growth of 0.4% to £113,971,000.

The society said the drop in profits “is a result of ongoing cost and margin pressures across the business”.

“The past decade has been one of unrelenting change for the retail sector,” it added, pointing to high-profile casulties such as BHS and Debenhams and the rise of challengers such as Aldi, Lidl and Ocado. “Against this backdrop, the society has undeniably been affected by the challenges that face all retailers currently.

“The board continues to regularly review the trends in turnover, cost,
and profitability and implement strategies where possible to address the issues.”

For the food business gross takings excluding fuel amounted to £87,294,000 (previous year £87,027,000), a like for like increase of 1.4%. But trading profit is down 5.08% year on year.

“The board continues to monitor the performance of each trading site on a regular basis,” says the report. “Where the long-term viability of a store is identified as a concern, remedial action is discussed before any store closures are considered. The board will update members as and when disposals are to occur.”

A new management structure was introduced to the food business last year following the departure of the head of the division. The new structure sees investment in six cluster managers to provide greater store-level supportn.
They are led by the food operations manager who reports directly to the CEO.

Profits were hit by increased theft and Chelmsford Star continues to invest in security measures, which is beginning to make a positive impact.

Gross takings at the society’s department stores the year fell 2.8% to £9,146,000. (previous year £9,406,000).

“Our turnover has been impacted by the decline in concession sales where the pool of partners continues to decline,” says the report. “Where new concession partners are unable to be found, products aresourced as own bought ranges.”

The head of the division left last year with the role now split between the CEO and the head of membership and marketing. The board continues to monitor performance closely and explore strategies to minimise the losses.

Gross takings in the travel business rose 5.4% to £10,400,000 (previous year £9,869,000), with sales increasing by 12.1% year on year.

In the funerals business, gross takings fell 7% to £1,936,000 (previous year £2,083,000). The report adds: “Whilst the death rate is down nationally, the
impact in our region is significantly less, combined with a drop in market share within the year. Strategies are in place for 2020 to mitigate this decline.

The society’s investment portfolio consists mainly of residential accommodation located above its shops. Rental income amounted to £330,000, up 2.6% on last year (£322,000).

The society’s Community Card scheme now supports 349 local groups. During the year, 68 of its groups withdrew funds raised by their supporters to the value of £2,345; this compares to 93 groups the previous year withdrawing £8,828.

Chelmsford Star is continuing efforts to reduce its environmental impact, and has commited to a 25% reduction in electricity consumption on a “like for like” basis over a five-year period to 2021. It says it has reduced consumption by 22% and has further initiatives planned to achieve and
exceed this target. During the year, electricity consumption reduced by 6.5%.

Of the waste produced by the business, 96% is recycled, adds the report. Within the estate, stores have separate food waste bins which are collected for anaerobic digestion. Also, we are partnered with Olio, who facilitate connections with local residents who can use surplus food.

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