Kwik Save on 'last legs' after dire Christmas

Sales slide again at supermarket group

Festive sales have slumped at Kwik Save, adding to fears about its future and piling further pressure on the ailing supermarket's new owners.

The group was already understood to be looking for a cash injection after a faltering performance earlier this year. The most recent figures from research group TNS, for the 12 weeks to 3 December, showed Kwik Save's share of supermarket spending had shrunk from 1.6 per cent in 2005 to just 0.2 per cent.

But new evidence suggests that the group has suffered a dire festive season as well.

"All the grocers are reasonably bullish [about Christmas], but obviously there's winners and losers and the major collapse is Kwik Save," said one senior retail source. "Sales are not actually at 0 per cent but there's poor availability and it's not going to be a great Christmas for them."

The supermarket sector is one of the most competitive and the budget segment has been particularly tightly squeezed. Rivals include not only Tesco but hard discounters Aldi, Lidl and Netto.

Kwik Save has also suffered from supply-chain disruption following its removal from the Somerfield business, its former owner. "Poor availability is just the last thing you need over Christmas," added the source.

Somerfield sold around 180 Kwik Saves in February to a consortium called Back to the Future, which was led by Richard Kirk, chief executive of the Peacocks fashion chain.

The highly regarded Mr Kirk has considerable grocery experience after a lengthy spell at frozen-food chain Iceland. But he is not involved with the day-to-day running of Kwik Save and the business has continued to struggle. It has already completed one cash call this year, in October, and many observers were shocked earlier this month when it emerged it was after more funds.

The chain has also lost two senior directors. Chief executive Paul Niklas, who was appointed in February, left in June, and managing director Andrew Villars departed in October.

Under City rules, the business must keep trading until the first anniversary of the sale, in February. But another senior retail insider said: "The business is clearly on its last legs."

Kwik Save was founded in 1965 in North Wales before being floated. In 1998 it merged with Somerfield but the deal was never seen as a success, with Kwik Save's performance dragging down its owner.

Somerfield was taken private last year by a consortium led by property tycoon Robert Tchenguiz, and Kwik Save was offloaded. Some outlets were turned into Somerfield's, others sold to Netto and Aldi, and the rest acquired by Back to the Future.

No one at Kwik Save was available for comment.