Nisa has announced a loss for the first time in its history after admitting it failed to adequately plan for the exit of its largest customer Costcutter last year.
The buying group posted an operating loss of £3m for the year to April, with turnover down from £1.6bn to £1.4bn.
Chief executive Nick Read said it had over-estimated the number of Costcutter retailers who would rejoin Nisa following the group’s tie up with Palmer and Harvey last year.
“Last year was always going to be difficult. We are all aware of the ongoing and increasingly competitive market. The threat of the discounters, the impact of food deflation, the downward pressure on prices across the sector and changing consumer habits and behaviours have all produced their own operational challenges,” he said.
“You need only look at the performance of the four major multiples – all four have produced declining like for like sales as well as disappointing year end results, while closer to home, Costcutter have slumped to a £34m loss following their tie up with Palmer and Harvey.
“Nisa invested in logistics, its own brand range and recruitment, to replace the business we lost. Although this approach saw some success, with over 500 stores joining us, the new business has yet to deliver the same profit levels.”
He pledged to improve efficiency to deliver a better service to members and claimed trading had improved in the first two months of the new financial year.
“We have already reduced overhead spend in the Centre by 10% and we are delivering a programme to optimise our distribution network and to improve efficiency,” he added.
Derbyshire retailer Paul Sohal, who moved from Costcutter to Nisa last year, was unfazed by the results. “I expected double digit losses given the climate - I don’t think it’s too bad, it could’ve been a lot worse. Look how badly the multiples have been doing,” he said.