Store closures hit sales at Somerfield supermarket chain

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Somerfield blamed store closures and refits across its 1,224-strong estate for a drop in sales at the supermarket chain, which includes Kwik Save, from £2.69bn to £2.66bn as a result.

Somerfield blamed store closures and refits across its 1,224-strong estate for a drop in sales at the supermarket chain, which includes Kwik Save, from £2.69bn to £2.66bn as a result.

Pre-tax profits were also hit by costs associated with the closure of its underperforming Kwik Save business in Scotland and due to provisions for closing a number of other stores and depots that meant profits fell from £17.6m to £15m in the 28 weeks to 6 November.

Commenting on current trading, the company said the first 10 weeks of the second half had resulted in a 1.4 per cent fall in group sales, with Kwik Save down 1.6 per cent and the Somerfield chain down 1.2 per cent. This was partly due to the increased time off Somerfield gave to staff over the Christmas and new year period, during which the company's stores were closed for longer than usual.

Steve Back, the chief executive, said operating profits before exceptionals had risen strongly, from £17.2m to £32.7m, as the company improved its margins by moving from branded grocery lines to fresh and pre-prepared products. He said sales in the second half of the year would benefit from the acquisition of 114 Safeway stores.

Mr Back said: "Margins have remained stable. However, as reported in November, the competitive environment, deflation and less discretionary spend, continues to impact the high street and neighbourhood market places, with trading at both the Somerfield and Kwik Save fascias remaining challenging."

Meanwhile, Brown & Jackson, the group that owns the Poundstretcher and Instore discount outlets reported a 2.7 per drop in sales over the past six weeks. Angus Monro, the chief executive, said: "We noticed a deterioration in trading from mid-October last year. As a result, we reduced forecast sales for December and in turn, stock commitment and costs."

Margins at the company are still in line with expectations, but it has reduced profit forecasts by £0.75m.

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