Scotland’s largest independent retail co-operative has announced a £4.5m profit, which is down £1.5m on last year.
Last year, Scotmid had warned the year would be challenging, with the food retail market sluggish in the year ending January 2014. The Scottish Retail Consortium reported a like-for-like food sales decline of 0.4% in the year, the worst market performance for a number of years.
But the co-operative said it was ahead of the market on sales, boosted by a merger with Penrith Co-operative in October, which led to total sales being increased by £3m to £381m. Nine stores were also integrated into the business under the trading name of Lakes & Dales Co-operative. The society employs nearly 5,000 staff in 350 retail and service outlets across Scotland, Northern Ireland and the north of England.
The society said margins had under pressure during the year, with funding given to promotional activity and a reduction in the rate of corporate dividend receivable from the Co-operative Group.
Chief executive John Brodie said: “I predicted a challenging year with a static marketplace and this has been the case. Consumer confidence in our core markets remains low and this is borne out by the Scottish Retail Consortium recording a like for like sales decline for the 2013/14 year.
“We have continued our investment in business initiatives, and process developments have delivered significant benefits in the year helping to mitigate the impact of some of the external market factors. The roll-out of in-store bakery counters, the refit of ten more stores to the award-winning Premium Fresh format, a strategic property investment in central Edinburgh and pension de-risking measures were particular highlights.
“However, downward pressure on prices and a further reduction in the Co-operative Group corporate dividend impacted on margins.”
The society’s non-food Semichem stores outperformed the market with the benefit of the introduction of tobacco, but due to an “extremely challenging” year six unprofitable stores were closed. Also, The Fragrance House trial has come to an end, which will result in the closure of these six stores.
Mr Brodie added: “The society’s non-retail businesses continued to make progress with property showing good growth and funerals continuing to grow with the opening of a further three funeral homes.
“Scotmid members continued to support the development of the society’s membership and democratic structures with the approval of regional changes to include West Lothian in our East Region and transitional arrangements for Lakes & Dales to operate within our West Region.”
The challenges will continue through 2014, added Mr Brodie. “The reported economic recovery appears to be specific to certain locations and sectors and is still not evident in our retail markets,” he said.
“There would normally be a time lag before any recovery filters down to consumers and so I do not anticipate a meaningful retail upturn in 2014. We will therefore continue with a measured approach to these difficult times, making hard decisions where necessary but with a focus on the development of new initiatives and continuous improvement.”