Musgrave Group announces sales of €4.8 billion and profit before tax and exceptional items of €60 million*

Musgrave Group, partner to entrepreneurial retailers across Ireland, the UK and Spain today announced its financial results for the year ended 31st December 2013.

The Group reported sales of €4.8 billion, which on a constant currency basis, were in line with last year. Profit, before tax and operating exceptional items, was €60 million, down 16% reflecting challenges in our business in Great Britain. Cash was well managed with net debt reduced by €19 million to €121 million. The Group continues to be strongly capitalised with net assets of €314 million.

Commenting Chris Martin, Musgrave Group chief executive, said:

“All our markets continued to experience difficult economic conditions in 2013, impacting consumer spending. In a flat Irish grocery market our brands increased sales and out-performed the market. SuperValu was up 1.1%, Centra up 3.5%, Daybreak up 3.8% and MarketPlace up 5.3% reflecting the investment made in these brands over the past three years through our ‘Winning in the New World’ strategy. We continued to invest in our brands and in margin and cash flow support for our retail partners. Great Britain was tough for all grocery retailers where the market is going through fundamental and permanent structural change, similar to what the Irish market experienced three years ago. Our GB business underperformed in 2013 and this is being addressed through a turnaround programme which is already underway. Against this backdrop, the Group delivered a very good performance in the Irish market.”

Business Review

Republic of Ireland

In 2013 our brands out-performed the flat Irish grocery market with SuperValu up 1.1%, Centra up 3.5%, Daybreak up 3.8% and Marketplace up 5.3%. The investment made in these brands over the past three years through our ‘Winning in the New World’ strategy has delivered significant benefits.

Centra is Ireland’s number one convenience brand serving three million customers per week. Centra sales growth was driven by the launch of the Centra Own Brand range, new store openings, exceptional value and commitment to Irish food producers which resonate with shoppers.

SuperValu performed exceptionally well in 2013 and is now the largest Irish grocery retailer with a market share of 25.2% and was this week recognised by RepTrak as the most reputable Irish brand in the country. Over the important final 12 weeks of 2013 it was the leading supermarket brand attracting 43,000 new shoppers in store. This was a result of a focus on an exceptional fresh offer, market leading promotions as well as the development of our mobile and online offer.

In 2013 we announced the integration of Superquinn into SuperValu creating an unrivalled Irish retail brand with a network of 223 stores. Investments in integration and name change incurred a planned exceptional post-acquisition cost of €12.2 million.

Our strategy in Ireland has delivered for shoppers, our retail partners and brands, which outside of the discounters, were the best performing in the market in 2013.

Great Britain (GB)

In a growing convenience market our sales in GB declined by 3%. In 2013 our GB business pursued a growth strategy but this has not delivered profitable sales. We are committed to the GB market and to working with our retail partners to deliver a profitable business for them and for us. Following the recent appointment of Peter Ridler, as Managing Director, to lead the turnaround, we are addressing the performance and implementing fundamental improvements to our brand disciplines and ways of working.
In light of the 2013 GB results, the Board has determined that it is appropriate to write down €131 million of assets in GB including all of the remaining goodwill of €78 million arising on the original acquisition of Budgens and Londis, €37 million for tangible assets as well as €16 million for onerous property obligations.

Outlook

In 2014 as we enter the third year of our Group strategy, we are continuing to see an improvement in sales in Ireland as green shoots appear in the economy. We will continue to invest in Ireland to build on our progress where our brands have market leading positions. We will apply many of the successes and learning from Ireland to the GB market where we are strengthening our brands and improving our offer to the consumer to ensure our retail partners can compete in an increasingly competitive convenience market. As we progress in 2014, our focus will be on driving profitable sales growth and delivering exceptional value to the shopper in all our markets.

* Profit is before tax and operating exceptional expenses of €143 million, which reflect the write down of assets in Great Britain and planned investments associated with the Superquinn integration.

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Will do better

The Reputations Agency is the Irish association of the world’s leading reputation-based advisory firm the Reputation Institute, which has been around since 1997. The Reputation Institute offers a rather impressive way of analysing the reputations of companies and institutions. It calls this the RepTrak® model. And the results of the fifth annual Ireland RepTrak 2014 study have just been announced.

As you might have guessed, this isn’t some hastily arranged phone vote or text poll. The study based its findings on over 4,000 consumer ratings in a wide-ranging list of categories like leadership, innovation, governance, corporate citizenship and being ethical and transparent as well as how good the consumers questioned feel about the brands and how much they admire or trust them.

Fairly demanding, we hope you’ll agree. So the fact that SuperValu had the highest score among Irish firms and overall, came second only to Volkswagen is quite a feat. This finding also comes at a good time for the SuperValu brand in general, with retail sales up one per cent to €2.1 billion in 2013 and a 25 per cent share of the market.

This is clearly good news – but we could do better. The fact is that any complacency at all, in good times or the bad ones we are slowly coming out of, is bad for business and bad for the consumer. We always assume we can do more and do better. So even though this is a great message that shows that SuperValu and Musgrave are on the right tracks, we are firmly focused on continuous improvement. For example, there are now 24 former Superquinn stores carrying the SuperValu brand, and these need to be fully integrated into the SuperValu family. There are new stores and more jobs on the way. There is continuing investment, both in the former Superquinn stores and in existing SuperValu outlets. There is the Own Brand range to enhance, local sourcing to encourage and local communities to support. We want to keep doing this, keep getting it right and, where we can, get even better.

So there are numerous reasons to focus on the job at hand rather than the awards SuperValu has won. But it’s nice to know that what we, and our retail partners, are doing has gained the approval of the Irish public. Thank you all for that. Now, however, it’s time to look forward. After all, the SuperValu brand now has an even bigger reputation to live up to.

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SuperValu named as the most reputable Irish brand

SuperValu, the leading Irish grocery retailer, has been named as the most reputable Irish brand, according to the results of the annual Ireland RepTrak 2014 study, announced by The Reputations Agency today. This is the fifth year of this comprehensive study, carried out by The Reputations Agency and their global partners, the Reputation Institute. SuperValu scored higher than any other Irish firm in the research, coming second to global car giant Volkswagen in the overall results.

The independent study measured the reputations of 100 organisations in Ireland between January and February 2014, based on more than 4,000 consumer ratings from members of the general public, and ranked how highly organisations are held in esteem, how much they are admired and trusted, and how good the general public feels about them. It also studied how an organisation was rated across the key dimensions of reputation, which are leadership, innovation, governance, corporate citizenship and being ethical and transparent in the way it does business.

Commenting on the award Ray Kelly, SuperValu Marketing Director said “We are delighted to be recognised as the grocery retailer with the best reputation in the market. This research reflects our position as the leading Irish retailer that is renowned for its support of the Irish food industry, local producers and strong community values. At SuperValu we source from Irish suppliers wherever possible, giving shoppers food of the highest quality at great value prices.”

“Our stores are independently owned and contribute substantially to their community through providing local jobs, sourcing from local producers and supporting local area initiatives. Our customers know that by shopping with us, it benefits their local community and a circle of trust has been formed as a result.  That’s why SuperValu has gone from strength to strength as a brand, growing by 30% over the past ten years.”

Niamh Boyle, Managing Director, The Reputations Agency said “We are living and working in a reputation economy where reputation is the new currency. Businesses are recognising this and so do the general public, who are more attuned to the reputation of an organisation than ever before. For the public, actions speak louder than words and an organisation needs to ensure stakeholders understand that the company is addressing issues that are pertinent to them as customers, be it good corporate citizenship or being ethical and transparent in the way it does business.  The credibility and reliability that follows creates economic value.”

The SuperValu network consists of 223 stores nationwide with a turnover of €2.6 billion, employing 14,500 employees and handling 2.6 million transactions a week.

75% of everything on SuperValu’s shelves is sourced or produced in Ireland. SuperValu continues to source locally wherever possible and purchases almost €2 billion worth of goods from Irish suppliers which helps to sustain 30,000 jobs in the Irish economy.

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