Finland's Kesko has said that sales at its grocery division were up 5.0% in comparable terms in the first half of its financial year, to €2.6 billion.
Operating profit at the division was up 14.6%, to €91.5 million, making grocery the conglomerate's most profitable business. Kesko also has a presence in the trade of building materials and specialty goods, and a car trade business.
Net sales were up 1.3% in its grocery division, which was negatively affected by the transfer of stores acquired from Suomen Lähikauppa to retailers, as well as changes in the store site network, the company said.
This process was completed at the end of June 2018, with 380 stores transferred in total between August 2016 and this summer. The group said that the synergies from the acquisition of the Suomen Lähikauppa stores have now been achieved.
Banner Performance
There was a positive performance across Kesko's grocery banners, with its K-Citymarket stores seeing a 4.0% increase in food sales (and a 0.6% increase in non-food) and its K-Supermarket operation posting a 7.7% gain in sales.
Its K-Market operation posted a 9.5% decline in net sales, however, this arm of the business was affected by store renovations and the integration of new stores. Comparable sales for K-Market were up 3.3% for the half, the group said.
Kesko's grocery operation spent around €60 million on capital expenditure in the half, of which €47.9 million was invested in store sites.
With the opening of two new K-Supermarkets and three new K-Markets in the second quarter of the year, Kesko now operates a total of 241 K-Supermarket outlets, 784 K-Market stores, 81 K-Citymarket outlets and 72 Neste K forecourt operations.
According to Kesko, the total grocery market in Finland (incl. VAT) is estimated to have grown by approximately 4.2% in the January-June period, and retail prices are estimated to have risen by some 2.3%, impacted by increases in tobacco and alcohol taxes at the start of 2018.
Overall Business
Overall, net sales at the business were €5.09 billion, with comparable operating profit totalling €89 million.
'During the reporting period, we successfully continued acquisitions and divestments and new service launches in line with our strategy,' the group noted in a statement.
'In the grocery trade, customer numbers rose in all K-stores thanks to successful chain redesigns. Sales grew the strongest in the neighbourhood market, thanks to the timing of Easter and warm weather early in the summer. Profitability improved thanks to the growth in net sales and realised synergies,' it added.
© 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.
