But lower purchasing costs following its link-up with five other retail groups meant that margins rose from 2.7 to 3.01 per cent and interim pre-tax profits and earnings were held at pounds 3m and 1.5p respectively. It is also resuming interim dividends, with a 0.3p payout.
The group converted nine Budgens stores to the discount format, Penny Market, and each was closed for about four weeks. John von Spreckelsen, chief executive, said the conversions - which carry 1,400 lines compared with the 7,000 available at Budgens - had attracted new shoppers but also deterred a significant number of the old customers. He added that it was too early to assess their impact on the group's results.
Budgens intends to open a further 40 Penny Market stores, though these will all be new developments rather than revamps funded by the pounds 30m convertible preference share issue last year. The format is based on the Penny Market stores operated by Rewe, the German group which owns 29.4 per cent of Budgens' shares now and could hold 46.2 per cent next year if the preference shares are converted.
Clive Clague, Budgens' chairman, warned: 'Sustained aggressive competition is having an adverse effect on pricing and will continue for the foreseeable future.'
Budgens' shares closed 1p lower at 41p.Reuse content