Scotmid Co-op has announced a trading profit of £3m for the 52 weeks to 28 January, £2.7m down on last year.
The retail society says the post-pandemic year was “dominated by the cost-of-living crisis and escalating business costs, especially energy costs”, prompting it to reduce controllable costs and maximise sales opportunities and strategic capital investment.
Total turnover rose £3m to £406m, and the society strengthened its balance sheet with net assets rising to a record £122.5m.
CEO John Brodie said: “Our food convenience business faced the most significant challenges in the year. There were a number of factors that impacted performance including energy costs, food price inflation, pay rate growth and low consumer confidence from the cost-of-living crisis.
“Semichem made positive progress in its recovery from the negative impact of the pandemic and moved successfully to a new freehold warehouse..
“Scotmid’s property business delivered income growth, benefiting from the timing of investment property transactions and commercial property rent reviews. Scotmid funerals conducted a similar number of funerals as last year, with continued demand for full-service funerals, personalised in memory of loved ones.
“Overall, this was a solid underlying financial performance by the society, especially against a background of low consumer demand, soaring inflation and supply chain disruption. Significant capital investments were made for the long-term benefit of the Society and net assets increased by nearly £10m to an all-time high of £122.5m.
“We continued to deliver community-based funding and support in line with our core purpose. In addition to local community grants, Community Connect scheme awards and our Winter Giving campaign for food banks, significant donations were made to several national and international good causes.
Related: Co-op Group maintains underlying profitability while reducing debt
“Last year-end, I highlighted the significant inflationary cost challenges facing the Society, but in reality, the background trading environment in 2022 was much more challenging than expected. The prolonged war in Ukraine, post-pandemic global demand, high UK inflation and, especially the rise in energy costs meant that both businesses and households have faced a cost-of-living crisis.
Most of our business cost increases were mitigated, but the energy cost escalation could not be covered by initiatives, especially in an environment where sales growth was challenging.
Related: Meet … John Brodie, CEO of Scotmid Co-op
“Looking forward I remain cautious in the short-term. In saying that, our balance sheet is stronger than it has been throughout the Society’s 163 history and guided by our core purpose, this provides the opportunity to seek out longer term opportunities and navigate carefully through the cost-of-living crisis.”
