Scotmid ‘ahead of rivals’
Chief says better economic figures are not showing in terms of sales
SCOTMID has warned that positive economic headlines have “not materialised in retail sales” with Scottish consumer confidence and disposable income both remaining depressed.
But Scotland’s biggest independent co-operative has claimed a performance “consistently ahead of the market” as it lifted operating profit from its stores, property and funerals empire by £1million to £5.5m in 2014.
Chief executive John Brodie said: “There is no doubt it continues to be a very tough market to be operating in. Our expectation is that there will be a time lag between better (economic) figures – not that we are particularly seeing any better figures just now – and consumers having money in their pockets.”
He said the Scottish Retail Consortium’s sales barometer showed a continuation in 2015 of the trend for 2014, where food sales were down 3.5 per cent and overall retail sales down 2.6 per cent.
Scotmid, he said, had through a series of initiatives “outperformed the market” on like-for-like sales, but as always detailed figures are not available for either its food stores or its Semichem discount chain.
The group lifted turnover by £5m to £436m (but in a 53-week year) and its balance sheet of £87m was hit by a £4.7m rise in pension liabilities to finish some 13 per cent down on five years ago. Scotmid has also had to contend with the loss of the annual dividend, thought to be in seven figures, from the Cooperative Group following its financial crisis.
Speaking the day after Tesco unveiled its record £6.4bn loss, Mr Brodie said: “The retail landscape continues to change rapidly as highlighted by announcements from all the major multiples to change strategies including decisions on store closures and future direction.”
But he commented: “I think small stores is the right sector of the market to be in, that is very much our heritage. I think small stores whether through ours, multiples or independents will evolve further as they have done, to give even more service to customers at the heart of local communities.”
Scotmid recorded a £3m pre-tax loss in 2013 after closing loss-making Semichem outlets and its six Fragrance House stores.
Mr Brodie said: “We will continue to take tough decisions where it is right for the business through difficult economic times.” He hoped the core business would “come out the other side” as things improved in the future but added: “Our belief is that future is still some way away.”
Mr Brodie said the group had progressed its vision for the food stores which had “helped differentiate us from the competition with a real focus on concept bakery, local products and the introduction of a number of key value lines”.
In-store partnerships with local bakers had now extended to 180 stores, giving Scotmid a higher quality product than many compet- itors and offering small bakeries another route to market.
He said Semichem had made “good progress”, despite a two per cent decline in the Scottish non-food market, partly thanks to landlord negotiations on property lease renewals. Mr Brodie said investment in both commercial and residential markets had helped the property division deliver another good year.
Scotmid Funerals had performed well and had highlighted that it would benefit from death rates beginning to level off.
He concluded: “While remaining cautious and measured in our approach, the society will continue to drive new initiatives and look for other potential areas for growth.”