Scotmid stays on course

Sep 29 2009 By Greig Cameron

Turnover up with further expansion plans for food stores and Semichem

Turnover from Scotmid's continuing operations grew almost nine per cent in the first half of its financial year.

For the 28 weeks to August 15 revenue was s183m while operating profits rose slightly to s4.6m.

Performance was affected by the sale of the M&S Toiletries business last year, increasing supply chain costs at the food business and training schemes to deal with new alcohol legislation.

Capital spend in refitting food outlets was up year on year including a s550,000 revamp of its historic Leven Street store in Edinburgh.

Two new convenience outlets and five Semichem stores were opened during the period.

Semichem has also quadrupled the range of products it sells online to around 2,000 lines.

John Brodie, chief executive, said: "The food side performed will in the first half despite the overall economic situation and the competitive marketplace it operates in.

"It had to deal with things ranging from an increasing cost base, particularly in distribution, and the new legislation for sale of alcohol.

"A negative sales impact on smaller stores in the second half is expected as a result of the implementation of this legislation.

"Semichem continues to grow and strengthen its position in the marketplace as a leading discount retailer of branded health and beauty products.

Strong like for like sales growth was driven by a focus on growing core categories such as household and fragrance to reinforce Semichems reputation as a destination for exceptional value."

Brodie is keen to keep growing both sides of the business.

He said: "We are always on the lookout and it is part of our strategy to grow the food stores we have.

"Semichem is well represented in Scotland and Northern Ireland. Although there are still some opportunities in those markets going in to the north

of England is a natural expansion from our base."

The commercial property interests at Scotmid have held up well with "minimal" tenant defaults.  

A new 20,000 square feet office block next to its headquarters in Newbridge, on the outskirts of Edinburgh, has secured its first tenant.

The funeral division had a small reduction in the number of funerals conducted but trading performance remained in line with last year.

Scotmid, which employs more than 4,000 people, has also rolled out new membership materials in its food stores and increased it membership base.

While Brodie believes Scotmid is in "resilient" sectors he warned recovery from the recession will take time.

He added: "There is a great diversity of views of what even the short term outlook will be. "Consumer spending has held up reasonably well in the sectors we are in but I don't think it is going to be easy for the next few years."