Scotmid warns of 'significant' inflationary challenges after resilient annual results
The Edinburgh-headquartered society delivered a £5.7 million trading profit for the 52 weeks to January 29, according to its latest annual report, which compares with a profit of £6.4m for the prior, slightly longer 53-week period.
Overall turnover of £403m was down £6m on the year before but the group’s net assets increased by nearly £10m to a record level of £112.7m while net debt reduced by £7.4m.
Chief executive John Brodie said: “This has been the second financial year impacted by the Covid pandemic and the varying effects it has had on our businesses. As we have gradually emerged from the crisis and moved to the ‘living with Covid’ stage, the impact on the society’s businesses has reversed.
“Semichem stores were fully open in 2021-22 and saw a steady improvement in sales as the year progressed. In contrast, consistent with the wider convenience sector, our food stores had a reduced local shopping benefit compared to the lockdown periods in 2020. The business also faced major challenges in supply chain and record sickness levels from the Omicron variant.”
He described the overall financial performance as “positive and resilient” especially when compared to the initial lockdown in 2020, which included a spike in food store trading as more shoppers stayed local.
The society’s property business had a resilient performance coming out of the worst of the pandemic while Scotmid Funerals saw a return of demand for full-service traditional funerals.
Brodie admitted the squeeze on household incomes was a challenge, adding that the group was trying hard to offset and absorb some of the higher costs.
He said: “As well as record levels of sickness due to Omicron, the society has had to navigate through some major challenges in the grocery supply chain. I am very proud of our colleagues who through hard work and dedication have continued to deliver for our communities despite the significant challenges faced.
“Looking forward, there is still planning uncertainty concerning the exit from the pandemic but it is clear that the society faces significant inflationary cost challenges in 2022.
“Our core purpose of serving our communities and improving people’s everyday lives will continue to guide us through these uncertain times which have become more uncertain because of recent geo-political events.”
The group, whose trading roots go back more than 160 years, said there had also been some constraints on its charity fundraising. Despite that, society members, colleagues and customers raised some £220,000 for CHAS and children’s cancer charity partners.
Semichem was founded in 1980 and became part of Scotmid Co-operative in 1995.
Last September, the society reported a strong half-year result but warned of “major challenges” including rising costs and supply chain disruptions.
It delivered a £3.1m trading profit for the 26 weeks to the end of July, ahead of expectations, and backed by an £8.1m increase in turnover to £205.2m. At the time, bosses highlighted a strong balance sheet and a “resilient recovery out of Covid”.
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