Investment: Somerfield keeps the City doubters at bay

SOMERFIELD, the supermarket group which merged with Kwik Save last year, said yesterday that the integration of the Kwik Save stores was on track and sales in its Somerfield outlets were encouraging.

Reporting doubled profits before exceptional items to pounds 113.8m in the six months to November, the company said it had started the conversion of the Kwik Save stores to the Somerfield format. It is also expanding its petrol forecourt deal with Elf to open up to 50 more stores over the next 18 months, creating 1,500 new jobs.

Somerfield, which walked away from a merger with the Booker cash and carry chain in September, said a Booker deal was no longer part of its plans. "It's not on our radar screens," said David Simons, chief executive. However, he refused to rule out a possible deal at a later stage.

It is deals that have transformed the Somerfield share price since its troubled launch on the stock market in August 1996. The shares soared on the back of the Kwik Save merger as the market warmed to the potential cost savings and buying efficiencies.

Though the City has been sceptical about the company's ability to grow sales and keep pace with industry leaders such as Tesco and Asda, US investors, in particular, have concentrated instead on the company's strong cash generation. US investors now account for more than a third of Somerfield's equity.

Yesterday's figures kept the doubters at bay once again, though like- for-like sales have slowed and the Kwik Save stores are being run for cash. Like-for-like sales at the Somerfield fascia were up by 3.4 per cent in the half, but this has slowed to 1.7 per cent in the eight weeks over Christmas.

At Kwik Save sales are down by 3.1 per cent on a same-store basis. However, the company said it would stop reporting like-for-like sales for the chain as they are no longer a prime consideration. It will concentrate instead on squeezing profits higher ahead of their ultimate conversion to Somerfield.

Ten of the Kwik Save outlets have been converted to the Somerfield format with a further 53 to change over the next four months. The Kwik Save head office in Prestatyn has been closed with only 100 of the 800 workers being offered jobs at Somerfield's Bristol headquarters.

The Food Giant stores have already been converted to the Kwik Save format. But though Mr Simons and his team insist the number of store closures will remain at 130, analysts believe the final number will be higher and that other under-performers will be closed.

The management task of integrating nearly 900 Kwik Saves with Somerfield's own 472-strong portfolio should not be under-estimated, though management has done well so far.

On full-year forecasts of pounds 221m the shares - up 5.5p to 431.5p yesterday - trade on a forward rating of 13. Though the company has its supporters, Paul Smiddy at Credit Lyonnais Laing is not impressed. "You could buy Safeway shares at the same price with less risk," he says.

A family sit and enjoy a quiet train journey
voicesForcing us to overhear dull phone conversations is an offensive act, says Simon Kelner
Arts and Entertainment
The cast of The Big Bang Theory in a still from the show
tvBig Bang Theory filming delayed by contract dispute over actors' pay
England celebrate a wicket for Moeen Ali
sportMoeen Ali stars with five wickets as Cook's men level India series
Morrissey pictured in 2013
Life and Style
The director of Wall-E Andrew Stanton with Angus MacLane's Lego model
gadgetsDesign made in Pixar animator’s spare time could get retail release
peopleGuitarist, who played with Aerosmith, Lou Reed and Alice Cooper among others, was 71
Robyn Lawley
ebookA unique anthology of reporting and analysis of a crucial period of history
i100  ... he was into holy war way before it was on trend
Arts and Entertainment
High-flyer: Chris Pratt in 'Guardians of the Galaxy'
filmThe film is surprisingly witty, but could do with taking itself more seriously, says Geoffrey Macnab
Life and Style
food + drinkVegetarians enjoy food as much as anyone else, writes Susan Elkin
Life and Style
lifeDon't get caught up on climaxing
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

1st Line Support Technician / Application Support

£20000 - £24000 per annum: Harrington Starr: A leading provider of web based m...

Team Secretary - (Client Development/Sales Team) - Wimbledon

£28000 - £32000 per annum: Ashdown Group: Secretary (Sales Team Support) - Mat...

Accountant / Assistant Management Accountant

Competitive (DOE): Guru Careers: We are looking for an Assistant Management Ac...

Senior Investment Accounting Change Manager

£600 - £700 per day + competitive: Orgtel: Senior Investment Accounting Change...

Day In a Page

Save the tiger: The day America’s love of backyard tigers led to a horrific bloodbath

The day America’s love of backyard tigers led to a horrific bloodbath

With only six per cent of the US population of these amazing big cats held in zoos, the Zanesville incident in 2011 was inevitable
Samuel Beckett's biographer reveals secrets of the writer's time as a French Resistance spy

How Samuel Beckett became a French Resistance spy

As this year's Samuel Beckett festival opens in Enniskillen, James Knowlson, recalls how the Irish writer risked his life for liberty and narrowly escaped capture by the Gestapo
We will remember them: relatives still honour those who fought in the Great War

We will remember them

Relatives still honour those who fought in the Great War
Star Wars Episode VII is being shot on film - and now Kodak is launching a last-ditch bid to keep celluloid alive

Kodak's last-ditch bid to keep celluloid alive

Director J J Abrams and a few digital refuseniks shoot movies on film. Simon Usborne wonders what the fuss is about
Once stilted and melodramatic, Hollywood is giving acting in video games a makeover

Acting in video games gets a makeover

David Crookes meets two of the genre's most popular voices
Could our smartphones soon be diagnosing diseases via Health Kit and Google Fit?

Could smartphones soon be diagnosing diseases?

Health Kit and Google Fit have been described as "the beginning of a health revolution"
Ryanair has turned on the 'charm offensive' but can we learn to love the cut-price carrier again?

Can we learn to love Ryanair again?

Four recent travellers give their verdicts on the carrier's improved customer service
Billionaire founder of Spanx launches range of jeans that offers

Spanx launches range of jeans

The jeans come in two styles, multiple cuts and three washes and will go on sale in the UK in October
10 best over-ear headphones

Aural pleasure: 10 best over-ear headphones

Listen to your favourite tracks with this selection, offering everything from lambskin earmuffs to stainless steel
Commonwealth Games 2014: David Millar ready to serve up gold for his beloved Scotland in the end

Commonwealth Games

David Millar ready to serve up gold for his beloved Scotland in the end
UCI Mountain Bike World Cup 2014: Downhill all the way to the top for the Atherton siblings

UCI Mountain Bike World Cup

Downhill all the way to the top for the Atherton siblings
Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

From 'Parks and Recreation' to 'Guardians of the Galaxy'

He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star