Supermarket chain Somerfield has revealed it suffered a 7 per cent profit slump during 2006, a year which also saw the retailer struggle through a ten-month takeover battle.
Discount chain Kwik-Save, the firm’s sister retailer, also recorded an annus horribilis in its latest results. The company, which was sold by Somerfield in February last year and recently came close to bankruptcy, posted a 16.9 per cent drop in sales in the year to April 19, 2006, and recorded a loss of £142.4 million before £124.2m of exceptional costs, compared to a £23.3m loss the year before.
Overall, the group recorded a £617.8m loss after £375.2m of exceptional costs at the Somerfield chain, including a £356.8m write-down of goodwill and £45.7m of stock write-offs relating to the discount of goods not deemed suitable for revamped Somerfield outlets. In the previous year, the group posted a profit of £47.7m.
Accounts reveal that former Somerfield chief executive Steve Black also received a £900,000 payout on termination of his contract, soon after the company was taken over by the private equity consortium which won the bidding war for the retailer.
Underlying sales dipped by 4.6 per cent in the year to April 29, 2006, as the management team brought in by the private equity owners (Apax, Barclays Capital and Robert Tchenguiz) cut back on sales of low-margin non-food goods.
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