Supermarket chain Somerfield showed the impact of challenging trading conditions today as it revealed a decline in like-for-like sales.
The Bristol-based group said the same store figure, which strips out site openings and closures, was 1.2% lower at its Somerfield estate and 1.6% down at Kwik Save in the 10 weeks since 6 November.
It came as Somerfield also announced pre-tax profits rose to £27.9m in the previous six months, from £15.5m last time, as it benefited from store refurbishments, closures and a more efficient supply chain.
The group said Christmas and New Year sales had been hit by the timing of bank holidays compared with the previous year, a reduced focus on electrical sales and shorter trading hours in some stores.
It said market conditions remained “challenging” at both Kwik Save and Somerfield.
During the six months to 6 November, like-for-like sales were 0.9% higher at Somerfield against a background of tougher competition and food price deflation.
Kwik Save’s same-store sales rose by 0.1% due to disruption from changes to the estate, as well as tough trading.
The group, which is the UK’s sixth largest supermarket chain, has been involved in a battle to win back market share after hitting problems integrating Kwik Save.
It has been refurbishing both chains and converted 68 Kwik Save outlets to the Somerfield format in the first half. It has around 700 Somerfield stores and more than 500 Kwik Save sites.
Chief executive Steve Back said changes to the stores would allow the group to meet the challenges of an “increasingly competitive marketplace”.
Somerfield announced in October that it was to take control of 114 smaller Safeway stores as part of a deal involving rival Morrisons.
Before Christmas, 34 of the sites were transferred into Somerfield’s ownership. All of the stores are expected to be trading as Somerfield by the end of this financial year.
It also acquired a depot in Welwyn Garden City, Hertfordshire, which it said would boost its distribution abilities in the south east of England.
The group said today that Kwik Save had extended its Simply range of value products to more than 220 lines, while Somerfield’s premium So Good and healthy Good Intentions ranges added more than 80 lines.
Shares fell nearly 3% after the update, off 4p to 150p.
Profits after exceptional costs, including the closure of Kwik Save in Scotland, came in at £15m, down from £17.6m last year.
Sales were down slightly at £2.6bn from £2.7bn last time.
References: EGi News 19/01/05
