Costs hit Scotmid results

Supermarket’ s annual profits and total turnover slide downwards

Scotmid Co-operative was counting the cost of the apprenticeship levy, business rates revaluation, higher pension costs and a challenging retail market in annual results yesterday.

Chief executive John Brodie said the retailer paid £250,000 for the apprenticeship “tax” last year, even though Scotmid received only £10,000 of Scottish Government cash – currently the maximum allowed under the pilot Flexible Workforce Development Fund scheme – in return.

Mr Brodie said the co-operative faced a cumulative burden of additional costs totalling £2 million, as well as inflation.

Pre-tax profits for the 12 months to January 28 came in at £6 million, down from £7.6 million the year before after a property revaluation.

But sales growth and cost control helped offset most of the cost increase in an overall “resilient” financial performance, Scotmid’s boss said.

Total turnover fell by £2.5 million to £374 million, not helped by the closure of loss-making stores in the group’s Semichem toiletry chain.

Average like-for-like sales grew by 0.8% across the whole business despite Scotmid facing “an avalanche of cost challenges and difficult economic circumstances”, Mr Brodie added. Semichem is most exposed to the ravages of the high street, which have hurt retailers such as Debenhams, John Lewis and Next, and Mr Brodie said leases were being looked at in the hope of avoiding the “hard decision” to close more shops.

Scotmid’s funerals business produced an “improved performance” in the second half of the year, he said.

The apprenticeship levy was introduced by the UK Government last April. How much a company pays depends on the size of its payroll. Authorities in each of the UK nations manage their own apprenticeship programmes.

Mr Brodie, who leads a business employing more than 4,000 people, said: “It is a tax on us ... and taking money out of the business that might otherwise be directed towards training.”

IN THE BAG: Scotmid Co-operative said sales growth helped offset a rise in costs created by an apprenticeship levy and rates re-evaluation