Property tax hits sales at retail giant Musgrave
Superquinn brand to be reviewed as firm plots expansion in Europe through buyout of rival
Musgrave, the biggest Irish owned retailer which runs the SuperValu and Centra empire, suffered a blip in sales as a result of the arrival of the hated property tax, according to chief executive Chris Martin.
"The problem with austerity is that it pushes people all the way. We've seen that in the last couple of weeks with the local property tax applications. It has clearly knocked consumers back. You can see it in the numbers. Not big amounts, but one minute you're up and the next you're not," Martin told the Sunday Independent.
"We'd seen good sales in Q1 and what we've seen in recent weeks is that March has been difficult for retailers. It wasn't as good as January or February. You can align that up with what happened," he said. "You're seeing a real reaction to all these things. Maybe four or five years ago you wouldn't have seen that as it was just continuous growth."
The property tax represented a wobble in Musgrave's otherwise bumper results, as group sales jumped 11 per cent to €4.9bn and operating profits increased by 13 per cent. Musgrave is now one of the few retailers in the country to record profit growth despite the downturn. The company plans to expand in Ireland this year with 65 new stores, creating 600 jobs. Musgrave is the second largest employer in the State with 34,000 staff – trailing the HSE.
Martin also confirmed that the future of the Superquinn brand was to be reviewed. Musgrave bought Superquinn out of receivership in 2011. It has been speculated that the 24 Superquinn stores could be rebranded as Centra or SuperValu stores. "We're continually looking at it," he said.
"I'm not worrying about the name. I'm more worried about getting those stores moving and then we'll be able to take further decisions once we've got that happening," the Musgrave boss added.
"That decision comes later, but we've got to work through this in terms of getting the stores right, so I wouldn't rule anything in and I wouldn't rule it out."
Musgrave has invested serious money in trying to turn around the ailing Superquinn brand, with some positive results filtering through. "We're pleased and we saw sales rise in the last month. That's the first time for five years," Martin said. "It's still 25 per cent off where it was at the peak."
Musgrave is also preparing to expand into Europe through the acquisition of a rival business. "It's very much just ground work at the moment," he said. "Europe is where the immediate focus would be. It will always be by acquisition because you have to have the infrastructure on the ground."
Musgrave is also examining plans to expand out of purely food and grocery retailing. "We could do. We're looking at where the SuperValu or Centra brands and where the minds of the consumers would allow these brands to go," he said. But it's not microwaves and electrical goods. "That hasn't gone through the minds. We are continually looking to see where those brands could extend to. It's very much a work in progress."