Londis calls on the Government to retain the ban on below-cost selling

ADM Londis which has reported a 7% hike in pre-tax profits for 2004 has called on Government to retain the ban on below-cost selling.

Joint chief executive Stephen O’Riordan, told the symbol group’s annual general meeting in Dublin that removing the ban would be bad for competition and the consumer would lose out in the end.

It is vital to the sector that the Grocery Order be left as it is, he said. “Any changes to it will pose a threat to the independent retail trade and ultimately to consumers. Removing the ban would threaten the 6,000 jobs in the sector and result in exploitation of the consumer by the larger multiples.

“We urge the Government to support our industry and the 6,000 people employed in over 300 local communities through our group, by maintaining this legislation as it stands”, he added.

Meanwhile ADM Londis which converted from co-op to private plc status in January has reported a 71% hike in its profit before tax to €2.7m for 2004.

Sales of €309m that were up 5% year on year, reflecting pretty low margins for the period in an intensely competitive sector.

Last year was one year of expansion and development for ADM, shareholders were told.

Commenting on the results Mr O’Riordan, said the symbol group was “delighted” with the outcome for 2004 in such a competitive, low margin sector. During the year ADM Londis expanded its market reach by adding 43 new stores. That figure was well ahead of the group’s forecast of 30 stores for the year.

Overall the expansion represents an investment of €70 million by Londis retailers in 43 new local communities across the country during the year under review.

In a highly competitive market Mr O’Riordan stressed the need for innovation and added value as key elements to the group’s long-term strategy.

While the locations are convenient the shops must be geared to consumer needs which are continuing to change, he said.

For the Irish market to stay innovative and competitive in the interest of the consumer he stressed the importance of the current legislation on below cost selling.

“To this end the Groceries Order is one of the most solid pieces of legislation in support of our industry and there is no doubt any changes to it will pose a threat to the independent retail trade and ultimately to consumers,” he said.

It is understood that The Consumer Strategy Group, whose report is due to be published shortly, favours a lifting of the ban.

However, Minister for Enterprise, Trade and Employment is against any change. Tánaiste Mary Harney, who set up the review group favours a change in the existing law.