Local supermarket chain Budgens PLC reported a positive set of interim profits yesterday [Thursday], buoyed by a series of new store openings.
Pre-tax profits for the company’s first half, ended 11 November, were up 13% to £9.76m year-on-year. Sales during the same period rose to £279.3m from £255.3m a year previous. The interim dividend has been raised 14% to 0.8 pence a share, compared with 0.7 pence for the same period in 2001.
The results are particularly impressive for UK-based Budgens, which, in contrast to larger sector rivals such as Asda and Tesco, generates its turnover purely from food items. Since last spring, shares in the company have risen by around 55%.
CEO Martin Hyson revealed that the profit increase was due to the company’s “successful strategy of fresh food convenience stores serving the local community”. It was also buoyed by continuing store openings; eight were opened in the H1 and Budgens now operates 234 outlets.
Looking at the Christmas and New Year trading period, like-for-like sales in the eight weeks to 6 January increased 4% despite “competitive” trading conditions.
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Budgen’s is confident that despite an increase in competition in the second half, further growth in existing and new stores will be seen by the year-end.
Speculation was renewed in the city yesterday [Thursday] that Irish company Musgrave, which controls a 28% stake in Budgen’s, is preparing to buyout the small supermarket chain. While some analysts have pointed out that Musgrave’s balance sheet is not yet strong enough, others have pointed out that the Irish group also owns enough convertible loan stock in Budgens to end up with a 43% stake as it is converted to shares in each of the next two Septembers. This could certainly trigger a full takeover bid.