Foodstuffs increases operating profit

paknsave-papamoa-store-photosFoodstuffs, which supplies Pak’n Save, New World, Four Square Supermarkets, Raeward Fresh, Henry’s Beer Wine and Spirits, and On the Spot convenience store banner groups, has reported boosted operating profit for the year ended February 28 in the face of strong competition.

The group has increased its revenue 3.9 per cent in the year to $2.7 billion from $2.6 billion.

Gross profit rose 4.4 per cent to $394.8 million from $291.8 million, but  operating profit increased less than one per cent to $258.2 million as operating expenses increased in the year.

A higher rebate to members of $233.6 million took the reported profit after tax down 16.5 per cent to $21.7 million.

Despite paying about 70 per cent less tax, the profit attributable to shareholders fell to $18.8 million from $21.5 million in the previous corresponding period.

Foodstuffs reinvested funds in several key areas, including advertising costs associated with the launch of New World Clubcard, transition costs associated with the new distribution centre at Hornby, and cartage costs through the removal of the freight recovery charge to members for produce bought through the co-operative.

Effectively, the extra volumes going through the distribution centre entailed higher costs, especially in the areas of supply chain wages and cartage costs.

The increased spending was partially offset as Foodstuffs recognised an additional $11.1 million in ”other income” arising from insurance capital replacement claims.

More than $10 million of the money related to the replacement of earthquake-damaged buildings in Christchurch and the gain on the sale of Bell Tea shares.

According to group chairman, Robin Brown, Pak’n Save brand’s low-price positioning is firmly entrenched and continues to deliver everyday savings to consumers, Foodstuffs South Island New World supermarkets are maintaining their position against competitors coming in at number two, and excellent in-store execution has seen all groups increase growth during the year.

Rural members also benefited as holiday makers stayed longer to take advantage of the fine weather experienced over the summer.

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