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Tuesday, January 19, 1999 Published at 11:12 GMT


Business: The Company File

Somerfield puts 1,500 jobs on the forecourt

Somerfield is fast becoming one of the UK's most successful food retailers

UK supermarket chain Somerfield has doubled its half-year profits and says it will create 1,500 jobs by expanding its retail business at the petrol stations of its partner Elf.

The strong profit-growth exceeded the expectations of market analysts and as a result the shares of the Bristol-based retailer shot up 15 pence to 441p.


[ image: The integration of Kwik Save is ahead of schedule]
The integration of Kwik Save is ahead of schedule
Profits increased to £113.8m ($188.7m) during the second half of 1998, up from £56.8m in 1997. Somerfield says this is a result of its merger with supermarket chain Kwik Save.

However, Somerfield's Christmas business - up 1.7% - was not as buoyant as that of rivals Tesco (up 3.1%) and William Morrison Supermarkets (up 5.3%).

Petrol partners

While the group is busy integrating its two store chains, the forecourt business will be the focus of further expansion.

Somerfield currently has only five stores at Elf petrol stations, but they have been so successful that the company wants to spend £25m to open up an additional 50 shops there.

Most forecourt stores specialise in what is called "distress grocery sales" - items like milk, bread and butter. Somerfield claims that its stores are more like mini-supermarkets, offering around 3,000 different products.

The two partners will keep their businesses separate - Elf collects the money from petrol sales while Somerfield keeps the profits from selling food and drinks.

Merger success

The future of Somerfield, though, will not depend on its forecourt stores but the success of implementing its merger with Kwik Save.

The merger took place in March last year, when Somerfield added 870 Kwik Save stores to its own 500 Somerfield shops. The group now employs more than 70,000 people.

Chief executive David Simons appears to be pleased with the result: "The first half has been a period of considerable progress. The combination of Somerfield and Kwik Save is ahead of schedule and the expected synergy benefits of the merger are being achieved."

The company has now begun to re-brand the Kwik Save operations. Ten pilot stores have already been decked in Somerfield livery and a further 53 conversions will happen during the next four months.



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