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Last Updated: Wednesday, 30 June, 2004, 12:28 GMT 13:28 UK
Revamps boost Somerfield profits
Somerfield supermarket
Investment in its stores is beginning to pay dividends
Supermarket chain Somerfield has reported a 60% surge in annual profits thanks to cost-cutting and facelifts for some of its scruffier stores.

The UK's fifth-largest grocery chain has beaten off fierce competition from rivals to post pre-exceptional profits of 41.1m from 25.8m previously.

Somerfield said the new financial year had got off to a flying start, with like-for-like sales up 2.7%.

The shake-ups followed Somerfield's rejection of a takeover bid last year.

Entrepreneurs John Lovering and Bob Mackenzie made an approach last summer, with a 120p-a-share indicative offer.

Upward momentum

Since it rejected the bid, on grounds that it substantially undervalued the company, shares in the supermarket chain have kept on rising and are now trading at around 153p.

Results from Somerfield mark the fourth consecutive year of profit growth, displaying the continuing recovery of the group
Iain McDonald, Numis Securities

The grocery chain operates around 1,250 stores throughout UK town centres - under the Somerfield and Kwik Save brands - and recently snapped up 11 convenience stores in Scotland for 2.6m.

For the year, like-for-like sales were up 1.1%, with revenues boosted by the spruced up stores and own-label ranges.

These include low-calorie 'Good Intentions' ready meals and 'So Good' luxury items, ranging from oak-conditioned cider to hand-finished cakes.

Chief executive and chairman John von Spreckelsen is stepping down as CEO in September and will take a part-time chairman's role, working a three-day week.

Management moves

His replacement as CEO will be current finance director Steve Back.

"I've done this (combined chief executive and chairman roles) for the last two years, and it was never intended that this would be a long-term solution," said Mr von Spreckelsen.

"I remain fully committed to Somerfield."

He declined to comment on whether he thought there would be another takeover approach.

Mr Spreckelsen's decision to take a more back-seat role was of little concern to analysts. He is known as a trusted name in London's financial world.

"Results from Somerfield mark the fourth consecutive year of profit growth, displaying the continuing recovery of the group," said Iain McDonald at Numis Securities.




SEE ALSO:
Shop refits lift Somerfield sales
06 May 04  |  Business
Job cuts in Somerfield shake-up
05 May 04  |  Scotland
Somerfield sees leap in profits
21 Jan 04  |  Business
Somerfield rebound disappoints
02 Jul 03  |  Business
Somerfield shuns takeover bid
05 Jun 03  |  Business


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