Losses in Norway have led Scandinavian retailer ICA to post a fall in fourth-quarter profits, the company said today (19 February).
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ICA, in which Dutch retail giant owns a 60% stake, reported a 32.4% fall in operating income to SEK515m (US$59.2m) for the three months to the end of December.
Stripping out capital gains on property disposals and impairment losses, ICA said operating income was down 20.8% to SEK524m.
Fourth-quarter net sales rose 9% to SEK24.13bn. On a constant-currency basis, net sales were up 8.1%.
CEO Kenneth Bengtsson said ICA’s operating losses in Norway grew during the fourth quarter, while operating income dipped in Sweden despite higher sales.
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By GlobalData“There is still a lot of hard work required to turn around ICA Norway,” Bengtsson said.
The ICA boss said a series of “pricing initiatives” at the retailer’s Norwegian stores drove down margins. Earnings were also hit by a clutch of unprofitable franchises taken over by ICA, as well as higher staff costs.
Bengtsson said a new management team for ICA’s Norwegian operations, appointed last autumn, would look to turn the business around.
“A new business plan has been adopted with a focus on driving sales, reducing costs, creating a strong base with an optimal operating structure and an intense customer focus,” he said.
Bengtsson became acting CEO of ICA’s Swedish business during the fourth quarter and said operating income from its stores in the country rose in 2008 thanks to higher sales.
Over the full year, ICA posted a 10.5% rise in net sales to CHF90.96bn. Underlying operating income, which excludes the gains on disposals, was down 5% at SEK1.91bn.
