Battling supermarket chain Somerfield showed today its recovery programme was firmly on track after reporting a return to profitability.
The move into the black comes after a tough period for the retailer, which has been hit by falling sales and profits following the costly integration of budget retailer Kwik Save.
But today Somerfield, which has more than 1,300 stores across the UK, was able to report sales growth.
For the 28 weeks to 10 November, underlying sales at Somerfield were up 2.5%, while Kwik Save saw a 3.5% improvement. Group sales sparked 2.9%.
The improved demand saw Somerfield reported interim pretax profits of £2.5m compared with a £21.7m loss last year.
Turnover improved from £2.40bn to £2.49bn.
The chain, based in Bristol, launched its five-year recovery plan 18 months ago, and executive chairman John von Spreckelsen said today it was on course to meet that deadline.
The group is overhauling its stores, both internally and externally, and is also focusing on improving product ranges. One recently introduced brand is a higher quality line of products called So Good.
It has also run marketing and advertising promotions, including a range of offers such as buy one, get one free.
Von Spreckelsen, who was bought in to revitalise the ailing chain, said he was “very pleased” with the figures.
He added: “We believe the turnaround is on track, although we have taken a cautious outlook for the year.”
He conceded that the profit levels were “very small” for a company of its size but also commented: “We believe that the calendar year 2002 will still bring growth for food retail, albeit at a lower level than last year.”
“In so far as the company is concerned, we are one of the largest companies operating mid-sized stores and we see this sector having a good future.”
The group also said today that like-for-like sales at Somerfield in the four-week Christmas period ending 5 January were up 2.9% and ahead 3.8% at Kwik Save.
Shares in the FTSE 250 group shot up 5% at the figures, gaining 4.5p at 95p.
EGi News 15/01/02
