Scotmid sales rise but bosses warn of cost and supply chain 'challenges'
Co-operative food business Scotmid has reported a strong half-year result but warned of “major challenges” including rising costs and supply chain disruptions.
The society delivered a £3.1 million 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. Bosses also highlighted a strong balance sheet and a “resilient recovery out of Covid”.
John Brodie, chief executive of Scotmid Co-op, said: “The society’s interim results last year were impacted by the first Covid lockdown, including panic buying, extra Covid costs and closed Semichem stores, so caution is required when using 2020 as a base for comparison.
“However, encouragingly, our result is positive compared to the last pre-crisis interim result in 2019.”
He said the pandemic had resulted in an increase in local shopping for the Edinburgh-headquartered group’s food convenience stores.
“As the pandemic carried on into 2021, this local shopping benefit reduced progressively, with no repeat of the panic buying experienced in spring 2020,” Brodie added. “But once again, thanks to the dedication of colleagues, we kept all stores trading normal hours despite severe pressure on staffing due to track and trace.
“Our food stores also experienced the widespread disruption in the UK-wide supply chain from driver shortages but responded positively with the support of local suppliers and the Semichem distribution network to supplement the national co-op network.”
The group noted that its Semichem business had benefited from having stores open that were closed from late March to July in 2020.
“Footfall on the high street hasn't yet recovered to pre-crisis levels but Semichem maximised the sales opportunity available and was effective in the control of costs,” Brodie said.
He also pointed out that Scotmid’s funerals arm had conducted fewer funerals in 2021 than the period that included the peak of the Covid crisis in 2020.
Brodie said: “Although our interim result demonstrates the society’s ability to adapt and respond as new trading patterns emerged, there will continue to be major challenges to face, such as rising costs, the widespread disruption of supply chains and uncertainty of the impact once all the Covid trading constraints have fallen away.
“So, looking forward, the society will continue to be flexible, focus on matters under our control, adapt our planning accordingly and continue to focus on our core purpose of serving our communities.”
In April, Scotmid revealed a £24m increase in full-year group turnover to £409m.
The group’s annual report and accounts came just weeks after it emerged that Semichem, the health and household goods chain owned by Scotmid, was looking to close about a quarter of its stores amid “ongoing challenges” to high street trading.
Semichem was founded in 1980 and became part of Scotmid Co-operative in 1995.
The wider group delivered a £6.4m trading profit for the 53 weeks ended January 30, compared with £5.6m for the prior 52-week period.
Earlier this month, Scotmid began the hunt for the next big thing in the Scottish food and drink world as it underpins its commitment to local sourcing.