Dutch food retailer and distributor Sligro has said that it intends to boost profits from its retail channel.
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A spokesperson for the company told just-food today (2 April) that, following a review of the business, the company developed a “master plan” that is expected to raise operating profitability by around EUR15m (US$20m) per annum over the next three years.
“The plan outlines a number of actions that are expected to improve profits…. There is expected to be a slight negative trend in sales as a consequence,” the spokesperson said.
As part of the initiative, the group said that it would rationalise its store network.
Currently, Sligro has around 140 full-service supermarkets, of which the group itself operates over 80 under the EM-TÉ format and independent food retailers operate almost 60 under the Golff format.
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By GlobalData“It is expected that in future about 15% of EM-TÉ and Golff’s current sales will not fit into the ideal format profile and so for those stores closer links are being sought with other organisations,” the company said.
Sligro said it would also look to optimise its formats and operations, taking advantage of room for improvement in existing sites and formats. As part of this, the group indicated that negotiations with the management of Golff on the transition of a “substantial proportion” of Golff branches to the EM-TÉ franchise format are entering their final phase.
The company added that by 2010 the costs associated with its acquisition and remodelling of former Edah stores in 2006 and 2007 are expected to “normalise”.
These measures are expected to contribute more or less equally to the anticipated improvement in operating profit, the company said.
“Sligro Food Group expects a steady improvement in food retail’s operating profit before amortisation of intangible assets in the next three years to some 3% – 3.5% of revenue. This is a level of some 15% of future capital employed. Webelieve this will create a sound foundation for further growth of retail activities in the future,” the company said.
