Scotmid Co-operative has delivered a £4.8m trading profit, (for the 52 weeks ended 28 January, 2018) despite unprecedented external cost increases with solid sales growth and tight cost control.
- Trading profit of £4.8m for the year ended 28 January, 2018 – down from £5.3m in same period last year.
- Above inflation costs of £2m faced for year
- Sales growth and cost control help offset majority of cost increase
- Strong balance sheet with assets of £99.6m
- Property revaluation gain of £3.9m down £1.2m
- Community Connect Membership initiative set for all Scottish trading areas
The past year has seen the Society face a cumulative burden of additional costs of £2m – over and above normal inflation such as the National Living Wage (NLW), the Apprenticeship Levy, rates revaluation and pension costs and those factors coupled with the perennially-challenging retail market saw a decrease in trading profit from £5.3m to £4.8m.
As a result of the sale or closure of some loss-making stores, the Society’s turnover reduced by £2.5m to £374m. Our underlying like for like turnover growth remained strong.
A very successful diversification of our property investment portfolio and a strong residential property market in Edinburgh helped the Society’s asset base to grow by £8m, re-enforcing the strength of the Society’s £99.6m balance sheet.
The Scottish Retail Consortium reported average like-for-like sales up by 0.3% in Scotland and up 0.8% in the United Kingdom – highlighting the challenges still being experienced across the entire domestic retail market.
John Brodie, Chief Executive of Scotmid Co-operative said: “Over the past year, the Society has faced an avalanche of cost challenges and difficult economic circumstances.
“We have responded with a strong performance – driven by innovation underpinned by a continuous improvement philosophy in all our businesses.
“The challenges have included the National Living Wage, the Apprenticeship Levy, extra rates and additional pension costs.
“The Society’s retail businesses continue to overcome those challenges with Scotmid’s food stores adapting to the ever-changing needs of customers through a programme of differentiation by driving significant growth in our food-to-go operation and a continuing emphasis on local sourcing.
“Semichem sales and cost initiatives helped to mitigate the pressure on margins from the weaker pound in the poor non-food market for retailers. The closure of loss-making Semichem stores and the trial of a new concept store represented an initial step to realign the business and provide a sustainable solution to the challenges in today’s retail market.
“Scotmid Property experienced another profitable year due to rental income growth and the successful sale of a large property in Edinburgh and subsequent reinvestment into other properties; a significant step in line with our diversification strategy.
“In its 90th year, Scotmid Co-operative Funerals produced an improved performance over the second half of the year.
“The Society extended its Community Connect initiative, which had been initially trialled in Scotmid’s North Member Region into the West with plans to roll it out into the East this summer.
“With short-listed good cause groups in each region being awarded up to £15,000 by members’ votes from funds generated by the sale of the single-use carrier bags, Community Connect continues to grow; increasing engagement with new and existing members and helping to increase attendance at the Society’s member meetings.
“I expect 2018 to be yet another difficult year for retailers generally with ongoing structural changes and no significant easing of cost challenges and more regulatory changes.
“The resilience we have shown over the last few years will continue in 2018 as we tackle both new and existing challenges, using our continuous improvement philosophy.”