Co-operative retailer Scotmid has improved its profits amid a sluggish industry backdrop but warned of “tough decisions” ahead that will inevitably result in more job losses.
Full-year results for the Edinburgh-based group, which dates back to 1859 and operates some 350 branches, revealed a 4 per cent rise in trading profits to £5.7 million, despite there being one less week in its latest financial reporting period.
However, the loss of those trading days and the impact of some store closures saw turnover drop by £12m to £371m. The group highlighted a strong balance sheet with assets in excess of £91m.
Chief executive John Brodie said the performance had strengthened in the second half of the year, with comparable retail sales “very positive relative to the sluggish market”.
According to industry data, like-for-like sales across the Scottish retail sector fell 2.4 per cent in the year to the end of January due to several factors including weak consumer confidence, food price deflation and unfavourable summer weather.
Brodie said the society, which also operates the Semichem health and beauty chain and a funerals division, had benefited from successful initiatives such as new artisan bakery and food-to-go lines.
But he cautioned over cost pressures including the introduction of the national living wage, which is set to have a “significant impact for the next few years”, and said “tough decisions” would need to be taken.
“The backdrop has not changed,” he said. “The initiatives we have driven into the business in the past few year we must keep driving forward and perhaps accelerate them.
“Through natural wastage and improvements in productivity and efficiency we will expect to see a small reduction in headcount.”
Brodie did not place a precise figure on the cuts but said they were likely to be in line with the year just past. The latest annual report showed the headcount falling by 242 to 4,418.
He added that the group’s trial with Conviviality Retail to roll-out the Bargain Booze brand north of the Border was “ongoing”.
“We are refining the offer with them and also looking for a number of sites,” he said.
The society is owned, managed and governed in Scotland and as a co-operative is democratically controlled by its members.