Per Strömberg, the chief executive of Swedish retailer ICA, has dubbed the group's second quarter earnings "unsatisfactory", after the group posted EBITDA of SEK 1.43 billion (€140 million), down from SEK 1.65 billion in the same period the previous year.
In the group's second-quarter statement, Strömberg said that volume variations and transport costs have pushed up logistics costs at the group, while its 'added services' operation posted a weaker performance due to the rollout of an e-commerce warehouse in Stockholm.
"On top of this, the high level of activity - with many different ongoing development projects - has led to a higher overall cost level for ICA Sweden compared with a year ago," he said.
Strömberg did note, however, that the group posted "strong sales" for the quarter, adding that the group's "new stores are doing well, our private label share is rising at a good rate, we had slightly higher income from profit sharing, and we saw a slightly better earnings in our non-food business".
Sales Performance
Consolidated net sales in the quarter stood at SEK 29.25 billion (€2.80 billion).
The group's ICA Sweden business posted sales of SEK 20.98 billion for the quarter, with Rimi Baltic posting sales of SEK 3.8 billion. Its Apotek Hjärtat pharmacy operation saw sales of SEK 3.6 billion.
While operating profit was up at both Rimi Baltic and Apotek Hjärtat, its ICA Sweden business saw profit decline to SEK 784 million, from SEK 870 million last year.
In its statement, ICA said that its stores grew faster than the market, with customer traffic up, as well as a higher average spend. Private label share rose to 25.6%, compared to 24.9% in the same period last year.
The Group’s investments amounted to SEK 747 million during the quarter. Of this total, SEK 201 million was attributable to ICA Real Estate.
Good Momentum
“The trends from the first quarter of the year continued into the second quarter - good sales growth, good momentum in e-commerce, strong cash flow and favourable earnings performance for several of the Group’s operations," said Strömberg.
"At the same time, ICA Sweden showed weak earnings, where the favourable sales performance was not reflected in operating profit. Targeted measures are on-going to restore profitability.”
Last week, ICA said that its July store sales rose by 4.1%.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
