The Dundee-based firm, which celebrates its 100th anniversary this year, said it had to take some “difficult decisions” during the year to improve profitability, including the disposal of several loss-making stores.
Chief executive Colin McLean said it was “early days” in the turnaround process but stressed that the business was “moving in the right direction”.
Financial results for the 12 months to the end of April show that turnover increased for the first time in four years, up 2.6 per cent to £187.9 million, while margins improved to 24.3 per cent, from 23.9 per cent last year.
Underlying profits, before exceptional costs, jumped 56 per cent to £764,000. The booking of a significant one-off cost of £1.6m, primarily to cover asset write-downs and lease charges resulting from the closure of a number of stores, resulted in a net loss.
The family-owned company distributes to hundreds of Scottish Spar stores and works with more than 150 local suppliers. It employs some 2,000 staff across the country.
McLean said: “I am pleased to report the growth in turnover and underlying profit and it confirms that the very early stages of our strategy for growth, outlined last year, are driving positive change.
“Buoyed by last year’s good summer, our growth is a result of several key changes, including a focus on improving and implementing consistent store standards, the development of our independent customer base and improvements to our offer in order to meet the changing customer needs within convenience retailing.”
He highlighted the firm’s strong in-store bakery and food-to-go offerings and developments such as Costa coffee and milkshake machines.
“We are differentiating ourselves from the competition,” McLean added. “The business is performing well at the top line and it’s good to see margins improving.”
He said rising costs presented the biggest challenge while Brexit uncertainty “remains an issue”.
McLean added: “We are doing limited stockbuilding where we need to but we are moving into the Christmas period anyway and you would expect us to be doing an element of that. We are not as exposed as the big multiples on fresh produce.
“We will continue to follow our strategic path, focusing initially on a back-to-basics programme, coupled with initiatives to improve our offer, attract more independent retailers to Spar Scotland and to improve the profitability of our business.”
Bosses at the company pointed out that CJ Lang’s recent like-for-like sales figures were outperforming the Scottish market.