Somerfield

COMPANY OF THE WEEK

SOMERFIELD, whose stock is the worst performer among food retailers, quit the fight against larger discounters such as Wal-Mart's Asda unit, and said it will carve out a niche as a local convenience-store chain.

A year and a half after buying the discount chain Kwik Save to double in size, Somerfield said it will sell the business and keep about half of the smaller stores. It also plans to sell up to 140 larger Somerfield outlets in an effort to shore up sales after an 8.1 per cent drop in the second quarter.

Somerfield has struggled since it bought Kwik Save in February 1998 - many stores have proved unsuitable for conversion to the more expensive Somerfield brand. The difficulties were exacerbated when Wal-Mart, the world's largest retailer, bought Asda in June and began cutting prices.

"The idea of converting Kwik Save stores to Somerfields was simply unacceptable to the consumer," said Ian Macdougall, an analyst at Williams de Broe.

The shares fell 10.6 per cent to close at a new low of 84p. The stock has dropped 79 per cent so far this year and is the worst performing stock this year on the FT-SE 250 index. Its market value has fallen by pounds 1.85bn to about pounds 415m.

The change in strategy to focus on the pounds 30bn UK market for local convenience stores prompted Somerfield's chairman, Andrew Thomas, to quit so that the company could put a new person in charge of the reorganisation.

As part of the new strategy, Somerfield plans to sell 350 Kwik Save stores after failing to integrate them into its name-brand business. It also wants to sell between 100 and 140 Somerfield stores that are over 10,000sq ft. Somerfield will be left with around 850 stores, including 400 Kwik Save outlets earmarked for conversion. So far, 70 Kwik Save stores have been changed to the Somerfield format, and sales at 30 of these have risen 25 per cent on average. The rest have seen sales grow about 16 per cent.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Business Analyst - Financial Services - City, London

£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...

Recruitment Genius: Administrator - IFA Based

£22000 - £24000 per annum: Recruitment Genius: This is an opportunity to join ...

Day In a Page

General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence
Public relations as 'art'? Surely not

Confessions of a former PR man

The 'art' of public relations is being celebrated by the V&A museum, triggering some happy memories for DJ Taylor
Bill Granger recipes: Our chef succumbs to his sugar cravings with super-luxurious sweet treats

Bill Granger's luxurious sweet treats

Our chef loves to stop for 30 minutes to catch up on the day's gossip, while nibbling on something sweet
London Marathon 2015: Paula Radcliffe and the mother of all goodbyes

The mother of all goodbyes

Paula Radcliffe's farewell to the London Marathon will be a family affair
Everton vs Manchester United: Steven Naismith demands 'better' if Toffees are to upset the odds against United

Steven Naismith: 'We know we must do better'

The Everton forward explains the reasons behind club's decline this season
Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

Michael Calvin's Last Word

Praise to Wenger for having the courage of his convictions