Edinburgh-based co-operative retailer Scotmid has warned that it expects the second half of 2017 to be “equally or even more challenging” compared to the first after seeing interim turnover drop “slightly” from the prior year.
The society operates 192 Scotmid convenience stores in Scotland, out of its 300-plus retail outlets across the UK, and said in its accounts that turnover for the 26 weeks ended 29 July reached £184.7 million, a year-on-year drop of £800,000.
However, trading profit came in at £2m, in line with the same period last year.
John Brodie, chief executive of Scotmid Co-operative told The Scotsman: “It’s a solid start to the year despite the uncertainty economically and the additional cost pressures that we’ve faced as a business.
“Economic buoyancy is a challenge – consumers are cautious and their confidence is at a fairly low level.”
Scotmid said the past six months has seen it deal with continued uncertainty, including a “sluggish” retail market and further costs from the national living wage, Scottish rating revaluation and apprenticeship levy.
Brodie also flagged the increased cost of imported goods but the group attributed its positive first half to innovation and efficiency measures. The chief executive added: “The society’s food convenience business performed well with like-for-like turnover growth driven by the continued roll-out of food to go and efficiency enhancements from our ‘make it simple’ programme.”
He also looked at Semichem, which has more than 100 stores across the UK. He said the health and beauty retailer delivered a sales performance ahead of the non-food market in Scotland, but was hit by supplier price increases. Turning to Scotmid Property, this “made significant progress with the diversification of our investment portfolio”.
Scotmid said the sale of a retail commercial property in Morningside, Edinburgh, has been completed with reinvestment of the proceeds in quality industrial and residential assets “well advanced”.
But Brodie was cautious looking ahead, expecting the second half to be “equally or even more challenging with increased cost growth from external factors and the continued market uncertainty over the Brexit outcome. Consequently we will continue to focus on innovation and our ‘make it simple’ programme in order to overcome these challenges and invest for long-term sustainable growth.”