Scotmid warns of possible Brexit blow to finances
Retail chain Scotmid Co-operative has delivered a solid first-half performance, but warned of a “more challenging” second half amid Brexit uncertainty.
Trading profit totalled £2.5 million for the 26 weeks ended 27 July, marking a rise of 8 per cent on the equivalent period last year. Turnover nudged up £3m to £190m.
The Edinburgh-headquartered group said its core food convenience business had performed strongly despite cooler summer weather. The previous year’s figures had been boosted by record-breaking sunshine.
Chief executive John Brodie said the latest results had been achieved in the face of “challenging cost pressures and the uncertainty surrounding Brexit”.
He noted: “Food convenience and property were the main drivers of growth. The performance of our food stores was particularly encouraging with the continued work on our ‘famous for food’ strategy helping to drive growth in a summer period which did not compare with the record-breaking summer the previous year.
“Our property business benefited from new lettings and rental income growth. In the face of the significant market challenges for non-food retailers, Semichem held its position assisted by successful cost control.
“Funerals conducted were down compared to a very strong result at the interim stage last year, reflecting the cyclical pattern of this business.”
Looking to the remainder of the year, Brodie warned that the possibility of a no-deal Brexit “makes it hard to predict the impact” on the group’s financial performance.
“The society will therefore continue to focus on matters within our control and celebrate the success of Scotmid’s 160 years of serving our communities and improving people’s everyday lives,” he added.
The group, which runs more than 300 stores in Scotland, Northern Ireland and Northern England, also pointed to a “strong” balance sheet with assets of £104.5m. Its charity partnership with the Scottish SPCA, RSPCA and USPCA has raised £325,000 to help fund the education of primary schoolchildren about animal welfare.
In April, Scotmid said it had overcome increased cost pressures to post a rise in annual sales after the hottest summer for decades boosted trade.
It recorded turnover of £378m for the year ended 28 January, an increase of £4m on the previous year. Group operating profit grew by £300,000 year-on-year to reach £8.3m.
However, results at Semichem, the society’s health and beauty products chain, were marginally down due to “poor” market conditions.
Brodie said at the time that the group was “very much investing in trials to look for a future sustainable business for Semichem”, on the back of the closure of several loss-making stores in recent years.
This includes rebranding two stores as SC Beauty, reducing its warehouse headcount and experimenting with store layouts and ranges.
Scotmid pointed to last year’s heatwave – the hottest summer on record in 40 years – as a key driver of revenues at its food business, which mitigated the impact of cost pressures including higher business rates, and energy bills.