The venerable retail and funerals business said yesterday that it would continue to be cautious as “the erosion of real terms disposable income is the everyday reality for our customers”, despite reporting “stronger than anticipated” sales over the summer months.
The Edinburgh-based firm – formally known as the Scottish Midland Co-operative Society – said sales had dipped from £211 million to £210m in the six months to 27 July compared to the same period the prior year, but pre-tax profits were up to £770,000 from £405,000 on the back of careful cost control measures. Operating profit slipped from £2.1m to £2m.
The group’s half-year figures do not include the impact of its proposed merger with Penrith Co-operative, which will bring nine stores around the Lake District into its fold. The deal was voted on by members in August and will go ahead subject to approval from the co-operative registering body, the Financial Conduct Authority (FCA).
The firm noted that the tie-up will see it expand its operations into England “for the first time in our 154-year history”.
Scotmid chief executive John Brodie said the move brought “opportunities for investment and development”.
The group, which operates some 200 food stores as well as 140 chemists under the Semi-Chem brand, said sales in its community stores were underpinned by the launch of in-store bakery counters and extended ranges. It has begun to experiment with its formats, creating 11 “premium fresh” outlets, and has also launched a “value” format in Prestonpans.
The firm has signed agreements with six Scottish bakeries – Aulds, The Breadwinner, Goodfellow & Steven, JG Ross, Stephens the Bakers and Stuart’s of Buckhaven – and expects to have in-store bakeries in 90 branches by the end of the year.
It pointed to some weakness at Semi-Chem and a “challenging” fragrance retail business in the first four months of the year but noted that there are “signs of customer confidence returning”.
Brodie said the company had renegotiated leases with the landlords of some of its chemists on better terms.
The firm said it was currently in the process of adding a block of 12 flats that it has agreed to acquire from administrators to its mainly Edinburgh-based residential property portfolio.
It opened one funeral home in Edinburgh this year to bring its number to 12. The funerals division added “strong” performance to the group “despite the decline in the death rate”.
The report noted: “Although there have been some reports of economic recovery, this appears to be specific to certain locations and sectors and is not evident in the retail and consumer sectors in Scotland, Northern Ireland and northern England.”