Somerfield springs back in black

Fiona Walsh12 April 2012

SUPERMARKETS group Somerfield, which also owns the Kwik Save chain, is in the black for the first time since 1999 and is resuming dividend payments. Chairman John von Spreckelsen today warned, however, that full recovery of the group, Britain's fifth largest food retailer, will take another three years.

Somerfield had operating profits of £28.1m in the year to 27 April against break-even the previous year. At the pre-tax level, it turned a loss of £6.6m into a £22.2m profit, on sales 2.5% higher at £4.64bn. There is a final dividend of 1p.

Although the figures were at the top end of analysts' expectations, current sales figures show that both Somerfield and Kwik Save have moved into reverse over the first eight weeks of the new financial year, with declines of 1.4% and 3.5% respectively.

This takes the group like-for-like sales fall to 2.2%. Von Spreckelsen said the figures are up against tough comparisons with the previous year, when performance was boosted by costly promotional activity. Margins have strengthened and he expects improved figures in the second quarter.

The balance sheet is strong, with cash of £29.2m, and von Spreckelsen said he was particularly pleased with sales uplifts averaging 22.5% in the revamped Somerfield stores.

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