UK retailer Somerfield has reported a return to profitability for the first time in three years but said recent sales figures have been sluggish.
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The fifth-largest retailer in the UK, Somerfield reported that sales in the first eight weeks of its new financial year were down by 1.4%. Sales at the Kwik Save subsidiary fell a more damaging 3.5% in the same period. This is disappointing news after Somerfield sales grew 0.1% and Kwik Save sales grew 1.4% during the second half of the previous financial year.
Chairman John von Spreckelsen said that the football World Cup had depressed sales, as high streets remained empty during matches. Poor weather has also been blamed, with the absence of expensive promotions also a factor as the group strives to maintain a low cost base. A better second quarter is forecast.
Pre-tax profits for the year ended 27 April totalled £22.2m (US$33.8m) before exceptional items, in line with analysts’ forecasts. After two years without dividends a dividend of £0.01 will be paid. In the previous year the group made a loss of £13.1m.
Sales in the full year increased 2.5% to hit £4.6bn, with analysts reported to be predicting a further increase to £40-50m this year.
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By GlobalDataA programme to enhance performance by adding new City Fresh format stores under the Somerfield banner was launched last year, while 24 stores were refitted. A further 98 stores were given a minor facelift to improve appearance and efficiency. The refitted stores have achieved an average sales uplift of 22.5%, reported Reuters.
