Musgrave blames ‘lack of discipline’ for profit slump
MUSGRAVE has blamed a “lack of discipline” in its UK division for a major slump in profits.
The Cork-headquartered grocery group made a pre-tax and exceptionals profit of €60m in 2013, down 16pc on the year before, it revealed yesterday - and took a €142.7m hit from exceptional costs on top of that. Sales of €4.8bn were flat on the year before.
That vast majority of these exceptional costs related to its UK business, including substantial writedowns associated with Budgens, the British convenience chain it bought in 2002.
Integrating its Supervalu and Superquinn chains, which the company controversially merged earlier this year, also cost it €12m. This integration process is not finished and costs will also impact its 2014 results, chief executive Chris Martin said.
The company did not maintain sufficient discipline with its British independent operators during the year as it rushed to sign up new ones without maintaining standards, Mr Martin told the Irish Independent, which hurt profits. A turnaround programme has now been put in place in the UK aimed at reversing this, led by former Monsoon Accessorize boss Peter Ridler. The vast majority of stores that fall under the Musgrave brand in Ireland and the UK - including Centra, Daybreak and Londis as well as Supervalu and Budgens - are operated as franchises by independent retailers, though it runs the stores that formerly traded as Superquinn directly.
Its Irish business had a better year. With the addition of former Superquinn stores, Supervalu now has a market share of 25.2pc - making it the largest grocery retailer in the country.