Somerfield gets bad break over Christmas

SALES at Somerfield are on the slide again, hit by fierce competition in the supermarket sector and the distractions of a major store conversion programme.

Profits for the six months to 6 November surged by 80% to £27.9m before tax and exceptionals, and the dividend is raised by 25% to 0.75p.

But the results were overshadowed by news that underlying sales dropped by 1.4% over the first 10 weeks of the second half. Somerfield was down 1.2% and the Kwik Save chain by 1.6%, compared with gains of 0.9% and 0.1% respectively in the first half.

Chief executive Steve Back said the group had enjoyed good trading in the run-up to 25 December but was hit by a number of factors over Christmas and the New Year, including the timing of the bank holidays.

"The big boys have a lot of non-food so they open on bank holidays like New Year's Day, but we don't,' he said. 'It fell badly for us.'

Turnover was also boosted the previous year by an offer on DVD players at £29.99, a promotion which was not repeated for Christmas 2004.

The group, which last year bought 114 smaller Safeway stores from Wm Morrison for £260 million, is in the middle of a major store conversion programme, which Back reckons cost it £20m in lost sales.

This was suspended over Christmas to ease the impact on trading but is under way again and should be largely completed by the year-end.