Kwik Save continues to weigh down the performance of UK retailer Somerfield, but second quarter and half yearly results reveal that the margins are closing. Will Kwik Save turn the corner or will it continue to hold Somerfield back?
The percentage of like-for-like sales in the 12 week period of the second quarter dropped by 0.2 per cent for Kwik Save compared to the same quarter in the previous year. However, the drop in sales was considerably less than the previous quarter, when sales had dropped by 1.5 per cent.
In the same quarter like-for-like sales increased by a healthy 2.6 per cent over the same period a year earlier - a respectable margin in the ever competitive UK supermarket sector.
Overall sales for the group increased by 0.9 per cent for the first half of the year, up fractionally from the 0.8 per cent growth in the previous year.
The group also emphasised the fact that Kwik Save moved back into positive like-for-like sales growth towards the endof the first half.
Commenting on the performance John von Spreckelsen, executive chairman, said: "The performance of the Somerfield stores continued to improve, benefiting from good growth achieved from the refit programme.
"Similarly, in Kwik Save, the store investment programme has been rolled out to 32 stores in the first half of the year (14 trial stores at the end of last year) which are showing encouraging growth. However, this represents only a small part of the overall Kwik Save estate of 649 stores."
The results will probably ensure that a complete take-over of the group, which was speculated on earlier in the year, will probably not take place. However a question mark remains over the Kwik Save division. Increased investments in Kwik Save and a halt in the sales decline will certainly do much to make it appear like an attractive proposition to investors.