Strong Underlying Performance From Scotmid as Profits Continue to Grow
30/09/2009
- Half Year Profits Up to £4.6m from £4.5m – strong underlying performance.
- Turnover up £15m for ongoing business
- Asset base remains strong
- Semichem moves into North East of England
- Good Progress made on Constitutional Review
Scotland’s leading independent Co-operative, Scotmid, has announced an operating profit of £4.6m marginally ahead of the same period last year.
However, this masks a good underlying performance, bearing in mind the loss of profit from the sale of M&S Toiletries and significant additional supply costs absorbed by Scotmid’s Food Convenience business. On an ongoing basis, excluding the profit made from M&S Toiletries, the Society’s operating profit grew by £0.6m, an increase of 16%.
In the first 28 weeks of the Society’s financial year, turnover for ongoing business grew to £183m, up £15m, driven by encouraging like for like growth in the retail businesses and resilient rental income from our properties. Scotmid also continues to enjoy the benefits of a strong balance sheet with net assets of around £94m.
John Brodie, Chief Executive Officer of Scotmid said, “Despite the recession we have continued to grow profit and move the business forward. Food’s performance was particularly encouraging bearing in mind the increased distribution costs.
“The food business has benefitted from the continuing investment in new stores, upgrades and refits over the past two years. The five refits completed during the first half of the year brings the number of stores trading in the new Scotmid format to 51.
“Two new Scotmid convenience stores were opened in the last six months including the site of the former Woolworths in Stockbridge, Edinburgh.
“The Food Division has had to deal with a significant amount of planning, administration, cost and training that have resulted from the change in alcohol legislation effective in Scotland from the beginning of September. A negative sales impact on smaller stores in the second half is expected as a result of the implementation of this legislation.
“Semichem continues to grow and strengthen its position in the marketplace as a leading discount retailer of branded health and beauty products. Strong like for like sales growth was driven by a focus on growing core categories such as household and fragrance to reinforce Semichem’s reputation as a destination for exceptional value. Our stores in Northern Ireland have also continued to benefit from increased cross border trade as a result of the strong Euro.
“The first half of 2009 saw Semichem continue to roll out its long-term growth strategy, with new store openings in Wallsend, South Shields and Ashington in England, Omagh in Northern Ireland and Cowdenbeath in Scotland.
“Following its launch at the end of 2008, the Semichem website – www.semichem.co.uk extended its range from 500 to nearly a full store range of 2000 products. Semichem is now looking forward to Christmas with an exciting new media and TV campaign whilst remaining concerned about the increase in VAT effective on 1 January 2010 both in timing and potential impact on trading.
“Our Property Division delivered a good performance against a background of difficult economic conditions. Both commercial and residential property markets continue to be challenging. On the commercial side, occupational demand is weak but we have benefitted from a low level of tenant bad debts. On the residential side strong occupancy rates have helped to maintain rental income.
“We have now completed the 20,000 sq ft office building adjacent to our Head Office in Newbridge and, even in a challenging office market, have secured our first tenant.
“In common with other funeral directors generally, the Funeral Division experienced a small reduction in the number of funerals conducted in the first half of the year. However, a focus on incremental services and cost control resulted in a trading performance in line with last year.
“The business made a number of investments to enhance our profile and service including new style signage for both Fountainbridge and Angle Park funeral homes in Edinburgh and three new Mercedes vehicles.
“Following two successful pilots we rolled out our new membership materials to all our food stores which made our membership offering more visible and easier to access for our customers. This roll out and our membership magazine Jigsaw has helped both increase our membership base and ensure that we have an ongoing dialogue with our members.
“The Society is currently in the process of reviewing its membership and democratic structure as part of a Constitutional Review. The aim is to create a structure fit for the 21st century and to date we have covered areas including member democracy, member relations committees, member communication and support.
“As part of the review we held a consultation meeting and the feedback from this was used to help shape the recommendations that were approved at a Special members meeting in September.
“This has been an exciting year for the Society as we celebrate our 150th anniversary. Celebrations have been held throughout the year involving staff members and customers including a raft of charity events and a DVD which will be launched at our OGM on 5th October. During the year we continued to work closely with our communities especially at store level.
“In these difficult times, it is even more important that the Society remains focussed on continuous improvement. As we move towards the end of our 150th anniversary, the Society finds itself in good health and ready to meet the challenges that lie ahead.
“I would like to thank everyone associated with the Society – our Directors, staff, members and customers for continuing to support us and believing in what we are trying to achieve.”
For further information please contact Malcolm Brown, Head of Corporate Communications at Scotmid Co-operative on 07831 817752.