Scotmid Co-operative delivered a £2 million trading profit for the first half of this year, hailing it as a positive performance against the background of a sluggish Scottish retail market and a period of considerable uncertainty.
Scotland’s biggest retailing mutual society operates food, Semichem, funeral branches, post offices and a property division.
It employs more than 4,500 staff in 350 retail and service outlets across Scotland, Northern Ireland and the north of England.
As well as the uncertainties caused by the Brexit referendum, Scotmid’s retail businesses faced challenges of price deflation, lukewarm consumer sentiment and additional costs from the introduction of the National Living Wage (NLW) .
It delivered a trading profit of £2m for the 26 weeks to July 30, in line with the same period last year, from a turnover up £4m at £185m.
It also said its balance sheet was strong with assets in excess of £91m.
.John Brodie, chief executive said, “Against this background and that of a declining Scottish market our retail trading businesses delivered good performances.
“The Scottish Retail Consortium reported a 1.6% average reduction in like for like sales in the six month period.
“In this context our food convenience business performed well, with turnover growth driven by differentiation initiatives such as bakery and food to go helping to offset the market decline.
“Our Semichem stores found it more difficult to counter market factors but still delivered a positive sales performance ahead of the market.
“This included the benefit of further growth in premium fragrance sales building on the success of last year.”
Mr Brodie said the funeral business performed ahead of expectations when compared against a particularly strong first half last year and increased competition.
Rental income from Scotmid’s property investment portfolio was robust, he stated, particularly for our residential property. The performance to offset the additional cost from the increase in Scottish business rates for vacant property.
Mr Brodie said the group’s Co-operative agenda continued with further work on membership strategy and a membership app.
The society’s commitment to pay a fair share of corporate taxation was acknowledged with the award of the Fair Tax Mark.
Scotmid produced a positive initial response to the challenge of the NLW by accelerating improvement initiatives while maintaining focus on the development of the core business.
The period had seen general market uncertainties magnified before and after the Brexit referendum result, and the group anticipated the uncertainty will continue until details of the exit from the EU become clear.
Scotmid expected the second half of 2016 to be equally or more challenging with the full cost impact of the NLW, and warned more cost increases, including the apprenticeship levy, will present further challenge in 2017.
