Chelmsford Star plans ‘major change’ in food business after half-year fall in profit

Measures will ‘ensure that processes are efficient, effective and are embedded within the operation’, says the society’s interim report

Essex-based retail co-op Chelmsford Star reported a 5.4% fall in trading profitability in its food business for the 28 weeks to 10 August, and painted a gloomy picture for the retail sector against the backdrop of Brexit.

Total trading surplus fell 0.7% to £597,000 from £601,000 for the same period last year, but the report also points to a 3% growth in like-for-like sales for the period.

After distributions, retained profits were ahead of the business plan and directors say the society remains resilient, despite the UK’s volatile and slowing economic growth, which the society says is partly down to “Brexit preparation”.

The report adds: “Notwithstanding the uncertainty over Brexit, the society continues to review and work with our buying partners to ensure that disruptions to stock and supplies are minimalised as much as possible, in the event of a no-deal Brexit.

“Consumer confidence remains low, given the expectation of uncertainty and price increases.”

Despite year-on-year like-for-like sales growth of 3.7% excluding fuel, its food business saw a 5.4% year-on-year fall in trading profit, taking it below the level expected in the society’s business plan.

“A major change programme shall be implemented during the second half of the year to mitigate the variance to the plan and ensure that processes are efficient, effective and are embedded within the operation,” says the report, which also promises “greater grass-root support for the food operations team”.

Innovations in the food business include the use of the EPOS software system to improve on-shelf availability, new energy-efficiency measures in stores and the trialling of compostable carrier bags. The society is also testing the use of undercover detectives to combat an increase in shoplifting.

The society’s department stores saw a year-on-year decline in gross takings of 2.3%, although furniture sales recorded growth boosted by clearance sales. The board says it continues to monitor performance at the stores and is exploring mitigating opportunities, and notes that trading losses for the period – £185,000 – are better than expected in the business plan.

The travel business saw year-on-year bookings up 1.9% and trading profit is comfortably ahead of budget, and the performance of the society’s investment portfolio also beat expectations.

Its funeral business saw a 3% fall in turnover, with Chelmsford Star – like other retail societies – pointing to a national decline in the death rate.

The report also noted the £60,790 raised for charity partner Alzheimer’s Society. Its new charity partner is Essex and Herts Air Ambulance.