Prices test for Kwik Save: Retailer reports 14% boost but sees tougher times ahead

KWIK SAVE, the leading discount grocery retailer, warned yesterday that the supermarket 'price war' raging in Britain's high streets could slow the growth in the group's sales and profits.

'It will be harder to maintain the rate of growth of sales and profits we have experienced over the past five years,' said Graeme Bowler, managing director and chief executive. Mr Bowler was announcing a 14 per cent rise in pre-tax profits to pounds 126.1m for the year to 28 August.

'The group has enjoyed another successful year despite the increase in the number of competing stores and the unprecedented surge we have witnessed in competitive pricing, particularly since the summer.'

Despite a larger-than-expected 14.4 per cent dividend rise to 18.3p, with a final of 12.9p, Kwik Save shares fell by 9p to 573p on the company's cautious comments.

Kwik Save, having increased its range of product lines from 500 to 2,500 items five years ago, is seen by some analysts as vulnerable to the lower pricing policies of big supermarkets and aggressive foreign discount grocery stores.

But Mr Bowler said that Kwik Save had increased its market share by maintaining a competitive position on prices. Sales increased by 14.4 per cent to pounds 2.9bn with negligible inflation in selling prices.

Kwik Save opened 69 new stores last year and now operates more than 800. It plans to open another 80 stores in 1993/4.

The company is looking at possible changes to its Tates Lateshopper chain in view of mounting competitive pressures and the small size of Tates in relation to the main business.

Simon Keswick, a board member since 1990, is to take over as chairman from Sir Timothy Harford in January. Mr Keswick is chairman of Dairy Farm International, Kwik Save's largest shareholder and a frequently tipped bidder.

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