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End user update: supermarkets

M&S hit hard, East of England Co-op goes from strength to strength, Morrisons on OFT’s radar

Full year results reinforce tales of tough year for retailer; food sales drop 5%

Marks & Spencer’s tortuous year was laid out for all to see in its full-year reports statement showing a 5 per cent fall in food sales (5.9 per cent on a like-for-like basis) to the year March 28.

Profits for the general merchandise retailer were hit by 40 per cent as it now embarks on a turnaround programme to improve fortunes.

In the food sector specifically, M&S said it has started to improve its performance and quoted figures from basket analysts, TNS Worldpanel showing it halted the rate of decline in its market share.

Market share year-on-year declined from 4.3 per cent to 3.9 per cent (TNS Food & Drink: 52 weeks ended 22 March 2009).

It added that it is the only food retailer not benefiting from food inflation as it continues to provide better values forcustomers.

Year-on-year performance has improved for two consecutive quarters.

Capital expenditure for the next financial year is expected to be £400m (2008/9: £652m; 2007/8: £1bn) after three years of investment and a shift of its focus from its property portfolio to the IT and supply chain.

It will, however, look to complete the remaining 20 per cent of the portfolio, which has not been refurbished, in the next few years.

East of England shines

East of England Co-op has reported a 10 per cent rise in profits for the full year to 24 January 2009 helped by a healthy contribution in food sales, which rose 6 per cent.

Food retail, which is seeing its third successive year of like-for-like sales increases, was also buoyed by recent trading; in its first quarter of 2009 sales were up 5 per cent.

The Society spent a record £27.7m on an ongoing self-funded development programme, and said it will continue to modernise operations without the need for borrowing.

Richard Samson, chief executive attributed the strong performance to the rollout of the East of England brand identity to food stores and supermarkets, store refurbishments and competitive pricing.

“Our refurbished stores have recorded significantly increased sales and our customers clearly value the service and convenience these local stores offer.”

A busy year has seen new developments and refits across the eastern seaboard with a substantial £1.4m store extension at Elmswell, Suffolk.

A recent start at a £1.3m project in Brightlingsea, Essex will see eco measures in lighting and refrigeration units complete in July this year, and similarly at Leiston, Suffolk.

Morrisons acquisition of Co-op stores on OFT radar

The Office of Fair Trading says it will investigate Morrisons’ acquisition of 30 former Co-op stores for signs of future anti-competitive behaviour.

The OFT has ruled that if there is a significant effect on the trade of markets for goods and services, the acquisition will be passed on to the Competition Commission.

Morrisons is awaiting approval to complete the £223m acquisition of 38 Co-Operative stores.