Strong Irish sales sees Musgrave profits rise 20%

MUSGRAVE have reported a 20% rise in profits on the back of strong sales at its Irish convenience stores.

The Cork-based company said it was also pleased with the performance of its expanding British operations, which includes the 2,100 Londis outlets it bought last June.

After-tax profits came in at €51.5 million last year on sales up 13% to €3.76 billion, a record for the family-owned company.

New chief executive Chris Martin said the company’s 535 Centra and SuperValu shops in the Republic saw sales rise by 6.3% to €2.7 billion last year. Like-for-like sales, which measures the performance of shops open at least one year, were up by 5.4%.

He said the increase came despite intense competition from major supermarket groups and it was adapting to the changing lifestyles of its customers.

“We have an offer very much tailored to support changing lifestyles. Clearly in Centra we are focused on convenience and we see the move to food on the go and dashboard dining,” Mr Martin told the Irish Examiner yesterday. “The other factor is that the market is very competitive and the 6.3% sales increase should be put in context of a food market where the prices have been declining and that points to a strong performance which shows that our independent retailers are competing successfully against the multiples.”

He argued against the abolition of the Groceries Order, which bans below-cost selling, a move which is believed to be favoured by the Government-appointed Consumer Strategy Group. “The Groceries Order should be maintained. It is a stance we have been consistent on because we feel the country needs to have fair competition. If we don’t have the protection of the ban on below-cost selling, people can move in to predatory pricing, out-manoeuvring local retailers, who have invested in their communities.

“If you look over to Britain, the head of Tesco is talking about wastelands where there is no food shop because you have the dominance of multiples.”

In Britain, sales at its Budgens and Londis stores were up from €1.07bn to €1.43bn. This includes the group’s Northern Ireland sales, which were up by 10% to €367.7m. The company has 114 Centra and SuperValu stores in the North and is planning to open a further 10 this year.

Mr Martin said the integration of Londis, bought last year for nearly €90m, was progressing as was the sale of the Budgens stores. It plans to operate Budgens as a franchise and some 71 of these outlets were now owned by independent retailers.

Musgrave’s Spanish stores, a mixture of cash & carrys, SuperValu’s and Dialprix stores, grew sales by 4% to €168m. A further five SuperValu’s are planned this year.

Despite the heavy investment and acquisitions in 2004, Musgrave managed to cut its debt by €12m to €383m, while shareholders will see the dividend rise by 4c to 24c a share.