Musgrave Group profits drop 16% as GB sales fall

Musgrave Group has posted a 16% drop in profits for 2013 with sales declining in Great Britain.

In its financial results for the year ended 31 December 2013, the group’s overall profit was €60m, down 16% on the previous year. This drop was largely attributed to its GB sales dropping 3% year-on-year.

The decline prompted the Musgrave board to write down €131m of assets in the UK, including all of the remaining goodwill of €78m arising on the original acquisition of Budgens and Londis; €37m for tangible assets as well as €16m for onerous property obligations.

Its Ireland businesses performed better, with SuperValu sales up 1.1%, Centra sales increasing by 3.5%, Daybreak by 3.8% and Marketplace up 5.3%. This success was attributed to its ‘Winning in the New World’ strategy that has been implemented over the past three years.

Group sales were €4.8bn, in line with last year, and net debt was reduced by €19m to €121m.

Musgrave Group chief executive Chris Martin said 2013 was a tough year for the entire grocery industry in the UK.

“Great Britain was tough for all grocery retailers where the market is going through fundamental and permanent structural change, similar to what the Irish market experienced three years ago,” he said.

“Our GB business underperformed in 2013 and this is being addressed through a turnaround programme which is already underway. Against this backdrop, the group delivered a very good performance in the Irish market.”

In its financial report, Musgrave pledged a turnaround for its GB business, led by new managing director Peter Ridler who recently replaced Donal Horgan.

It stated: “In 2013 our GB business pursued a growth strategy but this has not delivered profitable sales. We are committed to the GB market and to working with our retail partners to deliver a profitable business for them and for us. Following the recent appointment of Peter Ridler, as managing director, to lead the turnaround, we are addressing the performance and implementing fundamental improvements to our brand disciplines and ways of working.”