Sunday 23 October 2016

Musgrave Group set to return to profit this year

Published 11/08/2015 | 02:30

Sales at SuperValu were €2.8bn over the period
Sales at SuperValu were €2.8bn over the period

Grocery giant Musgrave Group has no plans to exit the Spanish market despite a renewed strategic focus on its island of Ireland retail businesses.

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Losses at SuperValu owner Musgrave Group reduced by €100m last year and the Cork- based business is set to return to profit this year, chief executive Chris Martin said yesterday.

The group's main grocery arm is now toe-to-toe with Tesco in the supermarket space in Ireland with around 25pc of the market each, but competition for household spending has become fierce.

Growth in the sector of just 1pc last year is well below the rate of growth in the wider economy.

Sales across the Musgrave Group, which controls the SuperValu, Centra, Londis and Daybreak retail brands as well as a wholesaling business, dipped slightly to €4.6bn in the year to December 27, 2014.

Supervalu sales were €2.8bn over the period, and it clocked up 2.6 million customers every week. Many of the 222 SuperValu stores are independently owned, but tied by branding and supply chains to the Musgrave umbrella. The same holds across the Daybreak, Mace, Centra and Londis chains.

The group recorded an operating profit before exceptional items of €66m, after exceptionals the loss for the year after tax was €13m, down from €113m in 2013.

The bottom line was hit by write-downs of €70m, mainly in the British unit, though property gains of €11m boosted the figures. Losses over the past two years were associated with the integration of the old SuperQuinn stores last year, and previously with costs associated with the restructuring of the group's British unit.

A deal to sell the British business, excluding Northern Ireland, which had sales last year of €1bn, to Booker Group is currently subject to Competition Authority approval there.

The timing of the planned sale means Musgrave Group is likely to have exited the market before changes to Sunday trading hours that were introduced in the last UK budget take effect.

The changes will put pressure on independent operators including Musgrave-owned Budgeons by making it easier for big retail stores to open for longer.

While Musgrave business is now focused mainly on the island of Ireland, it said a Spanish unit had performed well in tough conditions, and there is no plan to sell the unit.

The Spanish unit generates cash and profits for the group, and as part of the EMD buying group benefits from scale, unlike the British business, despite being a fifth the size.

Here, Musgrave is pushing a reorganisation of its retail business on both sides of the border, with a marketing focus on fresh and healthy food and community involvment as key differentiators.

However, pressure from Aldi and Lidl as well as Tesco and Dunnes Stores means grocery margins remain tight, with the big five retails all pushing high profile voucher and discount campaigns.

Irish Independent

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