Musgrave today announced results for financial year 2016. The Group reported sales of €3.7 billion and profit before tax of €73 million*. Net cash was €121 million and shareholder funds were €249 million at year end.
Commenting, Chris Martin, Musgrave Chief Executive said:
“2016 saw a strong performance by Musgrave benefitting from investment in our brands, a clear focus on cost reduction and the delivery of a transformation programme which we initiated in 2014 to turnaround the business and return to growth. Investing in our brands during the recession was a successful strategy positioning us to benefit from recovering economies in the Republic of Ireland, Northern Ireland and Spain.
Our business performed strongly in 2016 with turnover up 3.4% on a constant currency basis and we are well positioned to deliver long-term sustainable growth, capitalising on the anticipated growth of the grocery and foodservice markets across the island of Ireland and Spain.
Our investments in value, range, own brand, digital and in-store design resulted in SuperValu, Centra, Daybreak and MarketPlace occupying market leadership positions in 2016. We are also innovating with our brands to drive growth. This has included award-winning formats, new concepts, digital innovations and new brands like Frank and Honest – our artisan take away coffee brand – which has been launched in SuperValu and Centra in response to increased consumer demand for freshly prepared food and drink in-store.
We are continuing to drive our business and to look for new opportunities as appropriate. While the business is performing well to date in 2017, we remain cautious as a result of the uncertainty created by Brexit and its potential to slow growth in the Irish food and grocery retail sector.”
Business Review
Musgrave is the leading food retailer and wholesaler in Ireland. Together with our retail partners, the business employs approximately 35,000 people in the Republic of Ireland alone, through our retail brands SuperValu, Centra and Daybreak and our wholesale brand MarketPlace.
In 2016, our strategy of investment in our brands and our focus on staying ahead of the consumer has served us well. This has seen us prioritise food leadership in response to a growing trend for healthier food choices. We have also focused on developing an omni-channel experience to ensure our brands are always on and always open.
Our partnership with local independent retailers remains our key differentiator and because we are uniquely positioned in every community in Ireland, we are ideally placed to understand the needs of our shoppers.
SuperValu consolidated its position as Ireland’s market leading grocery retailer with sales of €2.67 billion for 2016, an increase of 2.4% over the previous year. SuperValu’s fresh food leadership strategy – bringing the best of fresh, quality Irish produce to consumers with a tailored, local offer in every store – continues to act as the core driver of the brand’s performance. In this respect, SuperValu’s Food Academy programme won a Ruban d’Honneur award for Innovation at the highly prestigious European Business Awards. SuperValu will invest €35 million in store revamps and open two new stores in 2017. A strong focus on retaining consumer loyalty saw the relaunch of the SuperValu Real Rewards loyalty programme with five partners – Bank of Ireland, Electric Ireland, Aer Lingus, Getaway Breaks and e-shops as well as the introduction of a new loyalty app.
Centra is redefining the convenience sector through its ‘Live Every Day’ programme which is focused on developing new in-store experiences as well as making it easier for shoppers to choose healthier food options. This strategy is delivering and Centra achieved sales of €1.59 billion in 2016, a 3% increase on the previous year’s performance. In 2017, Centra will continue to develop its offer to consumers while refurbishing over 100 stores as part of a €20 million investment programme.
MarketPlace continues to be the largest and fastest growing wholesale supplier to retail, foodservice and SME businesses across the island of Ireland. In 2016 MarketPlace launched a new concept in Cash and Carry of the future with the successful introduction of Food Emporium offering hundreds of new and local products as well as specialist fresh meat, fish and cheese. In 2017, MarketPlace plans to bring the Food Emporium concept to other locations across Dublin and Belfast.
In Northern Ireland, our brands are performing well. We are focused on becoming the number one consumer choice for convenience shopping by 2018. As part of this agenda, we have invested in 17 new store openings and we are revamping 70 SuperValu, Centra and Mace stores.
Our Spanish regional business also performed well in 2016, marking a turnaround in the performance of that business. We continue to see improvement in the Spanish economy and our Dialprix convenience stores and Dialsur wholesale outlets are benefitting from continued investment in store revamps and an improved fresh offer.
To further grow our business, we are exploring new opportunities that leverage our expertise in developing food retail and wholesale brands. As part of this strategy, in 2016 we announced an export business to China through a partnership with Alibaba. A flagship SuperValu e-commerce storefront opened in March 2017 on Alibaba’s Tmall Global platform selling directly to Chinese consumers. We also launched the new foodservice franchise brand called Chipmongers – a modern take on the traditional fish and chipper. Chipmongers outlets are owned and operated by local entrepreneurs, consistent with our strategy of supporting entrepreneurs operating businesses in their local community.
Outlook
The grocery sector has come through a challenging period and now faces the headwinds of Brexit. While optimism has been tempered by the recent political and economic uncertainty, the grocery market across the Island of Ireland and Spain is still growing and we also see further opportunity for growth in the foodservice market. The decisions taken during the recession to both invest in our brands and restructure and transform our business means that we are well positioned to deliver long-term sustainable growth.
* Profit before tax excludes exceptional non-cash pension gains of €15.5 million
