Musgrave cut retail prices €140m last year

MUSGRAVE Group, owners of the SuperValu and Centra franchises, slashed €140 million off retail prices last year as the recession hit consumer confidence.

The group says the discounts it will offer this year to Irish consumers will be even bigger as the retail grocery price war intensifies in a declining market fuelled by the economic slowdown and as consumers demand a better bang for their buck.

As a result of last year’s cuts, group profit for 2008, before tax, was down a significant 20% to €75.5m.

Announcing its results yesterday, Musgrave said sales rose 5% to €4.8 billion at constant exchange rates, and fell 1% at actual rates.

The group’s retail and partner operations across Britain and Ireland, and to a lesser extent Spain, recorded total sales of €7.1 billion, an increase of 6% on a constant currency basis but down marginally in real terms.

Chris Martin, group chief executive, said that with the recession across all markets and with the Irish market contracting, “I regard this as a satisfactory performance”.

“I am pleased to report that our Irish retail brands outperformed the market again in 2008 driven by our investment in brand development over the past three years,” he added.

The Cork-based group will underwrite prices in its 862 franchised Irish stores for the next few years if necessary, said Mr Martin.

The owners of the business, that was established in 1876, have always “taken the long view” and are prepared to support consumers and their retailers in tough times.

The group been active in acquisitions for a number of years. In Britain, it owns the Budgens chain of consumer stores, acquired in 2002, and Londis, bought in 2004.

It acquired J&J Haslett in the North in 2007, which includes Mace and Holmes Cash and Carry operation, and it now supports more than 3,400 stores in total.

Borrowings, which rose substantially after the Budgens deal, have fallen steadily in the past few years and were down from €95.6m to €86.2m at the end of 2008.

Looking ahead, the group says competition is getting tougher and there will be casualties in the years ahead.

It expects its long tradition to stand it in good stead and Mr Martin said he envisaged no change in the “structure” of Musgrave, saying the firm will remain with its original owners.

Financial director Tim Kenny said many of the companies served by Musgrave were facing financial pressure from the banks.

“The banks are being unnecessarily tough. I would say that,” he said.

Donal Horgan, managing director of SuperValu and Centra, said what was driving the group forward was its commitment “to working together to bring value to the consumer.”

That commitment was strong and was supported by a €5m advertising campaign on some brands last year, which will be supported by similar campaigns in 2009, Mr Horgan said.