Nurdin & Peacock, the cash and carry operator, has turned a somersault by quitting its lossmaking US-style discount warehouse business, Cargo Club, one year after a much-trumpeted entry into the market.
J Sainsbury, the supermarket chain, has paid a total of £45m for the three properties at Croydon, Wednesbury and Bristol, but said it had no intention of entering that business sector.
N&P was disappointed at turnover in the stores, largely based on the American Costco format of selling well known brands cheaply to consumers. The clubs made losses of £7.4m, including marketing costs, in the year to December 1994.
Alex Rentoul, N&P's commercial director, said another factor in the decision to pull out of the business - with the loss of 400 jobs - was an increasingly difficult environmental climate in getting planning permission for big new stores.
He said this was despite membership of the Cargo Clubs exceeding expectations - reaching about 113,000 at the end of 1994. "We would have preferred members' visits to be more frequent," he added.
J Sainsbury plans to open the 36,000 sq ft Bristol store as a supermarket, and the 85,000 sq ft Wednesbury property as a Savacentre hypermarket. It might sell the Croydon outlet.
N&P said yesterday it believed better returns were available through developing its trade and business warehouses. It is integrating the 10 M6 cash and carry branches, bought for £22m last year, into this format.
David Poole, the former N&P chief executive who launched the Cargo Club format, resigned last October amid talk by the remaining management of a "need for a new management style".
Yesterday's disposal is expected to lead to a £5.5m write-off by N&P, which is expected to give the company a net profit of £8.5m on the deal. The cash will be used to reduce the group's borrowings and to develop the trade and business warehouse format. The market liked N&P's decision to admit defeat, marking the shares up 12p to 170p, against a 1994/95 high of 232p.Reuse content