Stay up to date with notifications from The Independent

Notifications can be managed in browser preferences.

Fierce competition pushes Argyll down

Heather Connon,City Correspondent
Wednesday 25 May 1994 23:02 BST
Comments

Your support helps us to tell the story

From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.

At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.

The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.

Your support makes all the difference.

PRICE competition from discounters and the large supermarket groups is hitting profits at Argyll, the owner of Safeway, Presto and Lo-Cost.

Sir Alistair Grant, chairman, said the market remained fiercely competitive although he believed that gross margins had stabilised.

But he warned that it was 'too early to predict with confidence the resumption of profit growth'.

Argyll reported a 13 per cent drop in pre-tax profits to pounds 361.8m on sales 9 per cent ahead at pounds 5.98bn in the year to 2 April. While that was largely caused by a pounds 37.1m increase in the depreciation charge as the group decided to write down the value of its superstores, profits at Lo- Cost, the discount chain, fell sharply while margins at Safeway were squeezed.

A review of options for Lo- Cost could mean all or part of the business - whose 270 stores are mainly in Lancashire, Wales and the Midlands - could be sold.

Argyll would not disclose Lo-Cost's results, although it was responsible for the 20 per cent drop in profits from the group's other food activities to pounds 40.7m as margins slumped from 4.9 per cent to 3.9 per cent. Presto, the other component of that division, continued to perform well.

Profits at Safeway, which accounts for more than 80 per cent of sales, rose 7 per cent to pounds 361.2m, largely due to new openings, which chipped in 11.6 per cent of the 12 per cent sales increase to pounds 4.9m.

Argyll's capital spending will drop from pounds 541m last year to not more than pounds 500m in the current year, and less than pounds 400m in 1996/7. Last year's spending pushed borrowings up to pounds 263m from pounds 42m, but Mr Smith said it expected to be cash-neutral within two to three years.

Earnings per share were 22.6p, down from 27.1p, but the dividend was increased by 6 per cent to 11.5p via a 7.75p final. The shares closed 9.5p lower at 239p.

Join our commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in