Musgrave confident despite 3% sales dip and 7% drop in pre-tax profits

THE Musgrave Group has said that it is well-placed to ride out the storm of the economic downturn, despite posting disappointing full-year results for 2009, including a 3% fall in sales and a 7% decline in pre-tax profits.

The Cork-headquartered retail group – which operates the SuperValu, Centra and Daybreak convenience store chains – reported pre-tax profits of €70 million and sales of €4.5 billion, with the group’s net debt being reduced by €27m last year to €59m.

Despite their decline, group chief executive, Chris Martin said the results represented “a satisfactory performance” for the business.

“We’ve successfully adapted our strategy to manage a tough and challenging trading environment in all our markets and we’re pleased to report a satisfactory sales performance in Ireland and an increase in UK sales,” he said.

“Although the trading environment continues to be tough, our focus is on supporting our retail partners to deliver real consumer value.

“Our business model is robust and having continued to reduce our debt and invest in infrastructure, we’re confident in the long-term future of the business. The plans we have in place will ensure Musgrave and our independent retailers emerge stronger from the recession with strengthened businesses and a platform for growth,” he added.

With regard to territorial sales, Musgrave saw a 7% decline in Ireland to €2.7bn, a 3% fall in Spain, but a 3% rise in Britain – where it operates under the Mace, Budgens and Londis brands.

The group is currently the sixth largest grocery retail owner in the combined British and Irish market.

Mr Martin said that while the upcoming budget in Britain would have a negative effect on consumer sentiment, the group was better-placed in the convenience area of the grocery sector and pointed to the likes of Asda and Waitrose as following suit.

He also admitted that 2009 had been a tough year, but said although the recession was not over, and the Irish retail market was still being re-shaped, Musgrave has seen improvements in volume growth and footfall, and customer loyalty is back in vogue.

Musgrave hopes to open 20 Centra stores, 10 shops under the Daybreak brand and another three SuperValu stores this year.

While the group’s management has previously been bullish about acquisition potential, Mr Martin said the current focus is on organic growth; although he didn’t rule out acquisitions down the line if the right opportunity presented itself.