Co-op cuts borrowings after sale

CO-OPERATIVE Retail Services, which owns Leo's, Pioneer, Stop & Shop and Living stores, lifted its key operating surplus by 39 per cent to pounds 31.1m last year despite a shrinking sales base.

By selling its dairy business, CRS was able to slash borrowings. Its annual interest bill fell from pounds 16.8m to pounds 10.8m. Gearing was reduced from 58 per cent to 27 per cent.

Before the interest line, the trading surplus grew by a more modest 5 per cent to pounds 52.5m, boosted by wider margins and tight cost control. Even excluding the dairy disposal, sales fell by 0.3 per cent.

The food division lifted sales by 1.6 per cent and profits by 17.7 per cent. As well as the core Leo's chain, CRS opened four more Pioneer discount stores and plans to continue expanding the chain. It is also modernising the Stop & Shop convenience chain.

Non-food had a tougher year, though the group did not strip out profits figures for the Living and Home World chains. Sales in the funerals division grew from pounds 28m to pounds 31m. Again no profit figure was given.

CRS wrote down pounds 3.6m on the value of its land for trading developments, paid pounds 945,000 in redundancy costs. There was also pounds 2.1m in re- organisation costs and pounds 2.3m in other exceptional charges. After the surplus on the sale of assets, the net exceptional cost came to pounds 5.2m.

Not yet adopting the new accounting rules that outlaw extraordinary items, CRS also set aside pounds 10m for warranty claims following the dairy sale to MD Foods. The retained surplus for the year more than doubled from pounds 20.6m to pounds 43.7m.

Harry Moore, chief executive, commenting on the Sunday trading debate, said he would like to see it legalised for non-food, but restricted to convenience stores in the food sector. Non-food shopping was 'a logical extension of the family's leisure activity,' he said. 'Our Homeworld stores, for example, can generate between 20 and 25 per cent of their weekly business on a Sunday.'