Monday 20 November 2017

Musgrave's Martin to forego bonus after 'sizeable losses' in UK

Flat sales and exceptionals blamed for poor year

Chris Martin, chief executive officer at the Musgrave Group
Chris Martin, chief executive officer at the Musgrave Group
Nick Webb

Nick Webb

Musgrave boss Chris Martin will receive "no bonus and no shares" for the first time since taking the job a decade ago, as the SuperValu and Centra company took a major hit as its UK operations continued to suffer "sizeable" losses.

The Cork-headquartered grocery group made a pre-tax and exceptionals profit of €60m in 2013, down 16 per cent on the year before and took a €142.7m hit from exceptional costs on top of that. Sales of €4.8bn were pancake flat compared with 2012.

"This is not something we are pleased with. This is something we have to rectify. Clearly we are not where we want it to be.

"It has impacted on share awards and bonuses," Martin told the Sunday Independent.

"It's clearly an issue fore us. We've made mistakes. I'm responsible for the group and I have to accept that. But the key thing is that we have a plan to move forward."

A number of Musgrave's UK management team have been replaced, including chief executive Donal Horgan, with former Monsoon chief parachuted in to lead the turnaround operation.

"Some people have left of their own accord because of the market being so challenging and some of them have said that it wasn't for them," Martin added.

"Donal [Horgan] did step down. He did resign, he realised that it needed a different set of skills.

Musgrave is not paying major golden handshakes to the departing executives.

"Overall, no. Clearly there are some contractual commitment but we haven't done anything outside of that. There is a recognition that there is a different set of skills needed."

The UK operations suffered because "we sacrificed some of our discipline and that hurt us", Martin said. "We relaxed the rules about people buying from us and credit controls and things like that."

Musgrave also wrote down €131m of assets in the UK, including all of the remaining goodwill of €78m arising on the original acquisition of Budgens and Londis, €37m for tangible assets as well as €16m for onerous property obligations, according to the firm.

The Irish market is looking healthier for Musgrave. "We don't see the market growing much faster than it is now," he says. The Irish grocery market is forecast to grow by around 1 per cent this year.

Martin expects to boost the volumes of own-brand goods sold in supermarkets with 2,000 lines introduced in SuperValu last year and 800 in Centra.

"There will be more this year. Around 33 per cent of what we sell is own-brand but if you look at Britain it's in the high 40s or 50 per cent, so there's more room," he said.

Musgrave is also continuing its major revamp of stores as well as an aggressive store opening programme. Some 25 Daybreak, 25 Centras and three SuperValus are set to open this year. It is also ramping up its "omnichannel" sales programme as its shopping app, web ordering and social media strategies continue to drive sales.

Sunday Indo Business

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