Scotmid eyeing market opportunities as it reports boosting of coffers but some erosion of profit in latest financial year

Scotmid Co-op says it is looking for opportunities “in the current marketplace” after reporting full-year results including the strengthening of its balance sheet and revenue total, but some erosion of its profits by various economic challenges.

The group, based in Newbridge on the outskirts of Edinburgh, has seen its trading profit for the 52 weeks ended January 28 amount to £3 million, £2.7m down on the previous year, while total turnover was up £3m to £406m, and its net assets rose by nearly £10m to a record £122.5m.

Chief executive John Brodie told The Scotsman that the organisation had expected a “tough year, but it turned out due to external events to be tougher than we were anticipating”. He said a year ago that the society faced “significant inflationary cost challenges in 2022”.

He has now said: “The prolonged war in Ukraine, post-pandemic global demand, high UK inflation and, especially, the rise in energy costs, meant that both businesses and households have faced a cost-of-living crisis. Most of our business cost increases were mitigated, but the energy cost escalation could not be covered by initiatives, especially in an environment where sales growth was challenging.”

'Overall, this was a solid underlying financial performance by the society,' it says. Picture: contributed.

Looking at specific business units, Mr Brodie also stated: “Our food convenience business faced the most significant challenges in the year. There was a number of factors that impacted performance including energy costs, food price inflation, pay rate growth and low consumer confidence from the cost-of-living crisis.”

Its Semichem division “made positive progress in its recovery from the negative impact of the pandemic”, while Scotmid’s property business “delivered income growth”, and Scotmid funerals “conducted a similar number of funerals as last year, with continued demand for full-service funerals”.

He added: “Overall, this was a solid underlying financial performance by the society, especially against a background of low consumer demand, soaring inflation and supply-chain disruption.”

The organisation also stressed its work to benefit communities, such as raising £375,000 for its charity of the year partners. “We continued to deliver community-based funding and support in line with our core purpose,” Mr Brodie also said.

“Looking forward I remain cautious in the short term. In saying that, our balance sheet is stronger than it has been throughout the society’s [164-year] history and guided by our core purpose, this provides the opportunity to seek out longer-term opportunities and navigate carefully through the cost-of-living crisis.”

When asked where Scotmid Co-op is seeing “opportunities using our financial strength in the current marketplace”, he said: “In all areas of the society, all the trading areas, as we've seen historically, sometimes in a downturn there are opportunities to invest for the longer term, be that the trading side or the property investment side”, with it buying some distressed assets in the wake of the 2008 financial crisis, for example.

Some separate recent reports have hinted at some improved consumer sentiment, Mr Brodie said: “I think customers will remain cautious until there's evidence of an improvement. Retail is a beneficiary of a strong economy, and it takes time for that to filter through. People have to have confidence that the money in their pockets is secure before they’ll come out to spend, so what we've seen is sales have continued to grow.”