UK: Somerfield reports profit growth, eyes top spot in convenience sector
UK food retailer Somerfield has vowed to keep the business intact and increase the speed of its recovery as it reported profit growth on target.
The group reported a 24% rise in pre-exceptional pre-tax profits to £25.8m (US$42.9m) for the year to 26 April, in line with expectations.
"While we are pleased to report further progress in rebuilding profitability, we recognise that the pace of recovery was not fast enough," Executive Chairman John von Spreckelsen was quoted by Reuters as saying.
The company also raised the estimated value of its property assets in order to explain why it recently rejected a second takeover bid from entrepreneurs John Lovering and Bob Mackenzie. A revaluation of 121 stores suggested a potential gain of £147m to their book value and the company estimates a further gain of £110m from the rest of its estate, reported Reuters.
Von Spreckelsen said he expects to dispose of around 25-50 unwanted stores this year and was not planning to sell anything other than some stores not in line with the company's strategy. UK rival J Sainsbury is keen to buy around 171 stores from Somerfield.
Finance director, Steve Back, said Somerfield believes it can be the number one UK convenience store operator. Back said the company's strategy would be to drive growth by focusing more on convenience retailing.
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