Scotmid Co-operative announced declining operating profits for the year to the end of January, but stressed that an 8% fall in returns belied strong trading performances across its divisions.
Chief executive John Brodie said his firm’s £6m return came after a strong performance in the second half of the year, following a dire summer which sent interim comparatives tumbling.
But he said the outturn was also affected by the cost of strategic business improvement measures and increased pension contributions.
Total turnover rose by around £1m to £428m, with underlying profits improving across funeral, food, retail and property divisions.
The performance was helped by the launch of a new ‘premium fresh’ format in four stores, including a refurbished outlet in Newport, which will extend the range of local suppliers on offer and improve the range of fresh food available.
In-store bakery counters have also been introduced, and will continue to be rolled out.
In all, around 20 stores are expected to become premium fresh outlets, while other food retail stores are likely to be converted into alternative formats specifically tailored to “best fit” the communities they serve.
Mr Brodie said the move would help to continue the important relationship between Scotmid and its customers.
“We’ve seen great customer feedback and increased revenue from these stores,” he said of the newly-designed shops. We see ourselves as part of our communities, both as somewhere that caters for them but also as an employer.
“Although in Scottish terms we are a big business, we’re not of a scale we can’t know our individual stores. It will take us a number of years to get around all of our stores, but we are of a size where we can deliver to our customers what works for them.”
He also highlighted the improved bottom line delivered by discount chemist Semichem, despite the extremely competitive marketplace pressure on the high street and customers becoming more selective in terms of where and how they spend their money.
The value chain was singled out for praise after a particularly strong Christmas period, during which time it attracted cash-strapped shoppers.
Strong food retail promotions were also said to have helped the chain get back on track after last year’s miserable summer saw a dip in trade.
Mr Brodie repeated his warning that the pressure on consumers would continue as part of what he termed a “new era”.
“Looking forward, we anticipate that 2013 will be another challenging year, with the expectation that the marketplace will at best remain static for a number of years,” he said.
“The current market does, however, present opportunities and Scotmid will continue to focus on new initiatives and business development as part of the long-term strategy for growth and continuous improvement.”
The chain operates more than 300 Scotmid and SemiChem stores across Scotland.