Somerfield's shares hit a three-year high on the day these results were released - the company said its store reformatting programme was finally producing sustainable improvements. "Many of our competitors undertake similar programmes and they get a very healthy sales uplift initially, but subsequent sales are lower," says executive chairman, John von Spreckelsen. However, the refitted Somerfield stores that enjoyed sales uplifts of over 20 per cent last year still show positive growth of 6 per cent, he says. The Somerfield chain's like-for-like sales rose by 2.3 per cent in the past 10 weeks, up a touch on the first half. Its Kwik Save stores' recent trading is up 0.4 per cent - a distinct improvement on the fall of 1 per cent in the first half.
Somerfield has a particularly high cost base so, if sales growth improves, profit growth should swiftly follow. Cost-saving measures involve renting out space in larger stores to other retailers. According to Mr von Spreckelsen, trials with clothing chain Peacocks and coffee shop Tchibo are proving a success, increasing the sales per square foot in the supermarkets. But margins will come under pressure this year as retail price deflation takes hold.
Numis Securities expects full-year, pre-tax profit of £40m, with EPS of 8.1p.
| Ord price: 142p | Market value: £704m |
|---|---|
| Touch: 141-143p | 12-month High: 142p Low: 65p |
| Dividend yield: 1.3% | PE ratio: 15 |
| Net asset value: 158p | Net debt: 1% |
| 28 weeks | Turnover | Pre-tax | Earnings | Dividend per |
|---|---|---|---|---|
| to 8 Nov | (£bn) | profit (£m) | per share (p) | share (p) |
| 2002 | 2.41 | 12.0 | 2.6 | 0.4 |
| 2003 | 2.41 | 17.6 | 3.6 | 0.6 |
| % change | - | +47 | +38 | +50 |
