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
Life and Style
love + sex
Life and Style
Tikka Masala has been overtaken by Jalfrezi as the nation's most popular curry
food + drink
News
people
Voices
A propaganda video shows Isis forces near Tikrit
voicesAdam Walker: The Koran has violent passages, but it also has others that explicitly tells us how to interpret them
ebooks
ebooksA special investigation by Andy McSmith
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: Graduate Application Support Analyst

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Reach Volunteering: External Finance Trustee Needed!

Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...

Christine McCleave: FP&A Analyst

£36,000 - £40,000: Christine McCleave: Are you looking for a new opportunity a...

Recruitment Genius: Sales Executive - OTE £40,000

£15000 - £18000 per annum: Recruitment Genius: This is a great opportunity for...

Day In a Page

Syrian conflict is the world's first 'climate change war', say scientists, but it won't be the last one

Climate change key in Syrian conflict

And it will trigger more war in future
How I outwitted the Gestapo

How I outwitted the Gestapo

My life as a Jew in wartime Berlin
The nation's favourite animal revealed

The nation's favourite animal revealed

Women like cuddly creatures whilst men like creepy-crawlies
Is this the way to get young people to vote?

Getting young people to vote

From #VOTESELFISH to Bite the Ballot
Poldark star Heida Reed: 'I don't think a single bodice gets ripped'

Poldark star Heida Reed

'I don't think a single bodice gets ripped'
The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn