Scotmid co-operative published its interim report, which shows an operating profit before exceptionals of £2.05m and a turnover of £212m, achieved despite a decline in the food market in Scotland. This represents an increase from 2013, when the society reported an operating profit of £2.032m and a turnover of £209m.
Scotmid responded to the decline in sales by adopting cost-control measures and focusing on emphasising its co-op difference. The figures show the society’s results for the 26 weeks ended 26 July 2014.
Cost control measures included a focus on store productivity, the efficiency of support processes and energy saving initiatives. The society has also invested in more efficient lighting and fridges to help reduce its carbon footprint. Its Moredun store in Edinburgh has been chosen as a model efficiency store by Resource Scotland and will receive some grant funding towards the cost of upgrading the energy efficiency of the store.
While it did not reveal its sales performance, the society said its like-for-like sales were ahead of the market. Scotmid attributed the growth in turnover mainly to the nine new Lakes and Dales stores integrated following the merger with Penrith Society.
The society placed a strong emphasis on in-store bakery counters, local sourcing and brand modernisation. This included the Premium Fresh format stores, the installation of self-checkout tills into 25 convenience stores and the roll out of Scotmid Radio. A new online customer feedback system has also been introduced, with 10,000 customers giving feedback. The society also reported raising a record total of £280,000 for Prostate Cancer UK, its charity partner of the year.
The report highlights that food price deflation, investment in customer promotional activity and the discontinuation of the corporate dividend from the Co-operative Group added pressure on margins.
Scotland’s largest independent co-operative continues to enjoy a strong balance sheet, with assets worth £90.9m. However, this represents a decrease from the £94m net assets for same period in 2013. Its inflow from operating activities has also decreased from 6.5m in July 2013 to 2.8m in July 2014.
Semichem, the society’s health and beauty retail chain, decided to close a number of stores where it was not possible to negotiate reduced rents. According to the interim report, the policy will continue as and when leases come up for negotiation.
Scotmid is also closing its six Fragrance House trial stores as their leases came up for renewal. According to the interim report, a number of Semichem stores were saved from potential closure through successful lease negotiations.
In terms of governance, the society approved the introduction of a balanced board approach to refresh the board and committees as a replacement to the age rule. It also continued to review its practices and policies to demonstrate compliance with Co-ops UK’s new governance code.