Scotmid ‘very cautious’ after fall in profits

Scotmid has posted a fall in profits, citing a difficult retail market and the poor Scottish weather in the early summer, and added that it is remaining “very cautious” on its outlook.

Scotmid saw profits fall after a difficult retail market and the poor Scottish weather in the early summer. Picture: TSPL

The Edinburgh-based co-operative society, which operates more than 195 convenience stores in Scotland, said operating profit, excluding exceptional items, dropped to £2 million for the 26 weeks ended 1 August compared to £2.1m the equivalent period a year earlier.

It said the impact of closed stores was the main driver of total turnover in the period falling to £206.5m from £212.3m.

Chief executive John Brodie told The Scotsman that the results marked a “solid performance in a difficult market for our retail businesses,” and coming amid a retail sales decline reported by the Scottish Retail Consortium.

He also highlighted that the society pursued the evolution of its stores as part of its “food vision” to differentiate its offering in the market. Developments have included broadening its range of local products and the further roll-out of 16 in-store bakery counters.

The Scotmid group also includes beauty-product chain Semichem, which Brodie said saw core stores gaining new products and lower prices on branded goods.

He said: “Tough decisions continue to be taken on loss-making stores but it is pleasing to report that a number of unprofitable stores were saved from potential closure through successful lease negotiations.”

Looking at its funeral business, which operates in the Scottish central belt, Brodie said it experienced a robust start to the year, “showing growth relative to a weaker first half in early 2014”. It is also “actively” looking for new funeral homes.

He also confirmed that Scotmid’s merger with Seaton Valley Co-operative, based in north-east England, has been approved and becomes effective this week.

“The merger will add to Scotmid’s membership in the lakes and dales region and this opportunity together with other new initiatives will be built into an updated membership strategy,” he said, but added that there are no similar deals on the horizon.

Brodie added that the group is evaluating the impact of the introduction of the living wage next year, which he said “represents a major challenge for the society”.

Looking ahead he said Scotmid plans to “accelerate efficiency and continuous improvement measures” to stay in “a strong position”.

Scotmid was founded in 1859 in Edinburgh as a co-operative society, with its first store opening in November of that year.