Kwik Save blames tax rise for fall in sales

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The Independent Online
KWIK SAVE, the discount food retailer, yesterday blamed tax increases for a 1 per cent fall in sales over the past eight weeks.

Derek Pretty, finance director, said: 'We are very aware of the impact of tax increases on our customers, many of whom are on fixed incomes.'

Sales volumes in the past eight weeks, excluding the impact of new stores openings, were about 1 per cent higher than the same period last year.

But that was after a 2 per cent cut in prices, which left the value of sales 1 per cent lower than a year ago. In the six months to 12 March, sales by value were 2 per cent higher, although prices fell 1.2 per cent, allowing for a 5 per cent rise in tobacco and alcohol prices because of duty increases.

Prices in groceries and food, which account for 77 per cent of sales, dropped 2 per cent.

The group said prices were likely to continue to fall as competition between the supermarket groups intensified.

Graeme Bowler, chief executive, said big supermarket groups had been cutting prices to bring them closer to those offered by discounters. Surveys had indicated that the large chains were suffering sharper price falls than Kwik Save. Verdict, the retail research consultant, estimated that prices for the big chains in April were 8.6 per cent below 1993 levels compared with a 6 per cent fall for discounters.

His comments came as the group disclosed a 7.2 per cent increase in profits to pounds 65.4m in the six months to 12 March, on sales 9.1 per cent ahead at pounds 1.63bn.

Earnings per share were 28.36p, up 7 per cent, and the interim dividend is increased from 5.4p to 5.75p a share.

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