Somerfield transformation aims to revive sales growth
Sales edge up across first half
Somerfield is confident that its strategy to transform the business through the acquisition of the Safeway Compact business from Morrisons will drive growth, despite a subdued start to the second half.
In the 28 weeks to November 6 group like-for-like sales grew by 0.6 per cent. The group, which operates the Somerfield and Kwik Save chains, said total sales would have shown growth of around 2 per cent when lost sales from both its store closure programme and conversion programme are taken into account.
Like-for-like sales grew by 0.9 per cent at Somerfield and 0.1 per cent at Kwik Save. In the first 10 weeks of the second half, including the key Christmas period, Somerfield like-for-likes are down 1.2 per cent and Kwik Save down by 1.6 per cent, producing a group like-for-like dip of 1.4 per cent.
The group said like-for-likes in the run up to Christmas were satisfactory, but between Christmas and New Year were adversely affected by the timing of bank holidays compared to the previous year, with a reduced focus on electrical non-food sales and reduced trading hours in some stores.
[img r]kwiksavewales.jpg[/img]The half saw the closure of the Kwik Save operations in Scotland and continued conversions of Kwik Save stores to the Somerfield format. The sale of the Safeway stores to Somerfield was announced in October. Somerfield said it is encouraged by the early trading performance of the stores transferred so far.
Chief executive, Steve Back, said: “This is a good set of results for the first half. I am pleased that we achieved a significant increase in operating profit while accelerating our estate renewal programme.
“We refitted more stores, converted 68 Kwik Save stores to the Somerfield fascia, developed the convenience business and closed underperforming sites. We are adding a significant amount of new retail space through the acquisition of 114 Safeway compact stores, 34 of these are now in our ownership and are already trading successfully.
“This activity is transforming our estate in line with our strategy, thereby equipping the group to meet the challenging conditions of an increasingly competitive marketplace.”
