Divi hope as Somerfield shows profit

SOMERFIELD, the food retailer with more stores than any other British supermarkets group, returned to profit and promised to consider the resumption of dividend payments in the summer.

The chain, which includes the discount business Kwik Save, delivered operating profits of £5.6m for the 28 weeks to 10 November against a loss of £9.5m the previous year. Like-for-like sales grew 2.5% at Somerfield and 3.5% at Kwik Save, making a group figure of 2.9%.

In the eight weeks since November, sales growth excluding the impact of new space fell to 1.9% as Somerfield sales increased just 0.6% against 3.7% at Kwik Save.

The company was trying to get the balance right between promotional activity to boost sales and profitability, which suffers when too much stock is given away. Executive chairman John von Spreckelsen believes that Somerfield has now achieved that balance, and points out that in the four-week Christmas period, sales at the eponymous chain were 2.9% ahead on an underlying basis.

'Our recovery will take time. There is no quick fix,' he said. 'However, we are not anti-dividend. We will review our position at our year end in July and make a decision then.'

The company, which has not paid a dividend since April 2000, produced earnings per share of just 1.1p this time.