Economic Performance
Company Performance
Musgrave Group was founded in Cork in 1876 by brothers Thomas and Stuart Musgrave, and has
grown to become Ireland’s biggest grocery distributor. In the UK,we completed the acquisition of
Budgens convenience stores in 2002 and bought the Londis franchise in 2004.We now have
operations throughout the island of Ireland, Britain and Spain.
TABLE 3: FIVE YEAR FINANCIAL HIGHLIGHTS
REVIEW OF 2004-2005
We have experienced significant gains in turnover and market share right across the Group.
The acquisition of Londis, the ongoing divestment of Budgens stores to independent
entrepreneurs, combined with substantial investment in supply chain innovation, means that
this was a period of transition for Musgrave.
Underpinning our success lies a great deal of hard work on the part of staff in all our divisions, alongside an equal measure of passion, commitment and local knowledge from our independent retail partners.
MUSGRAVE SUPERVALU-CENTRA – REPUBLIC OF IRELAND
SuperValu Stores
For the year ending 31 December 2005, SuperValu’s 171 independently owned Republic of
Ireland supermarkets delivered €1.82 billion in retail sales - a five per cent increase on 2004.
Super Valu now hold 19.7% of the grocery market share in Ireland.
The Musgrave Group is proud of all its brands.We have continued to work hard to make SuperValu
stores even more appealing through systematic improvements to service, quality and range.
The SuperValu brand continues to differentiate through strength in fresh food, particularly Irish
meat and produce, a consistent keen value offer and the expertise of local owners. Throughout
the reporting period, brand recognition was sharpened with a wide range of marketing initiatives,
creating a strong uplift in sales for retailers.
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Store investment
More than €70 million was injected into SuperValu stores in 2005, including the refurbishment of 22 stores and five new SuperValu stores in RoI. SuperValu reach and scale was further strengthened in November with the announcement that the Pettitt’s independent supermarket group would join SuperValu in 2006, bringing an additional €85 million retail turnover and 80,000 square feet of food retail space for SuperValu.
Plans for 2006 Looking ahead, SuperValu retailers plan to invest €40 million in new store development during 2006. By year-end, 11 new supermarkets will be trading with the brand, including the five new Pettitt’s stores. A further €105 million will be invested in the refurbishment or extension of an additional 54 SuperValu supermarkets.
Such investments mean that SuperValu continues to make significant contributions to job creation in local communities across Ireland. Around 350 jobs will be created as a result of the 11 new store openings,with an additional 250 jobs expected through the extension and refurbishment of existing stores.
Centra Stores For year-end 31 December 2005, Centra independent convenience stores achieved a 14 per cent increase in sales on 2004 to €1.035 billion. This growth builds on the 9.5 per cent retail turnover increase achieved in 2004.
2005 was the first time Centra retailers have exceeded the €1 billion retail sales mark, an exceptional business performance in a climate of food price deflation. Centra storeowners invested €70 million in new stores and the refurbishment and development of existing stores, creating approximately 525 new jobs in 2005. More than 11,000 people are now employed in Centra stores in the Republic of Ireland.
The year ahead Responding to consumer demand for quality plus convenience, MSVC plans a further 40 Centra stores in 2006, creating an additional 900 jobs, and will see Centra store numbers in the Republic of Ireland exceed 400.
An additional 40 new appointments in trading,marketing, fresh food development and
customer service will also be made in MSVC in support of the Centra business.
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MUSGRAVE SUPERVALU-CENTRA – NORTHERN IRELAND
For year-end 31 December 2005,MSVC NI retail sales grew by 9.4 per cent to £267 million
(approximately €395M). The business was further strengthened by an additional £10 million
(approximately €15M) investment in both 2004 and 2005 towards new and existing stores.
Sixteen stores opened in the course of the year, along with rapid development of the off licence category, which saw the thirtieth unit open during 2005. At year-end, store numbers totalled 120, comprising 86 Centra and 34 SuperValu stores.
MUSGRAVE BUDGENS LONDIS – UK
The combination of Budgens and Londis has annualised retail sales of £1.8 billion (approximately
€2.6 billion) in 2005 and after an extensive review and consultation with retailers we have now
initiated a major programme of investment in supply chain and systems. This is a significant
development programme that will be systematically rolled out over the next few years.
Divestment of Budgens Stores to independent retailers
It is now two years since we announced our intention to divest Budgens corporate stores to focus on supplying and supporting the independent sector. In what should be regarded as an important transitional phase for the business, it seems likely that the sales process will be completed – as planned – by the end of 2008. At the end of 2005, there were 131 company-owned Budgens stores, 80 independently-owned Budgens stores and in excess of 2,050 independently owned Londis stores.
Our focus on a local, consumer-led approach goes to the very heart of our business model and
is what helps differentiate our stores from the multiples. It’s an approach that has helped the
Group gain significant market share in the Republic of Ireland, and which we believe has the same
potential in new markets.
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Londis - strong sales growth
2005 saw the first full year of trading of our Londis GB business. Not only have we seen strong
sales growth both at wholesale and retailer level, but there has been significant uplift in the
numbers of retailers trading regularly with the Group.
Central to this growth has been the extensive communication undertaken to understand retailers’ needs. Based on this feedback there have been a number of changes to our offer resulting in significant improvements in sales and retailer loyalty.
Since acquiring the business in 2004, we have worked hard with retailers to drive up standards right across the brand. Key to this has been to instil consistency with regard to basics like service, promotions and standard of shop-fit. Considerable progress has been made to this side of the business in 2005 and a great deal more is expected in the year ahead.
MUSGRAVE WHOLESALE SERVICES (MWS)
MWS operates four brands in both the Republic of Ireland and Northern Ireland – Musgrave
Cash and Carry, Musgrave Foodservices, Daybreak and Day-Today – two chains of convenience
stores owned by independent retailers.
During the reporting period,MWS continued to develop its strategic focus on the €3.5 billion a year foodservice market, an important growth market for MWS and it is anticipated that this side of the business will be further developed in 2006.
In January 2005, the business acquired Variety Foods (NI) Limited which, together with its acquisition of C&R Frozen Foods Limited in October 2004 and the launch of the Musgrave Excellence foodservice product range, will ensure that the Musgrave foodservice business will continue to grow rapidly thanks to the benefits of the enhanced reach and scale of its nationwide distribution network.
In November 2005, MWS launched new symbol store group ‘Daybreak’ with an initial investment
of €0.5 million. After six months, 75 stores were already operating under the Daybreak banner.
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DIALSUR - SPAIN
Dialsur, the Group’s Spanish division, continues to make progress. 2005 saw a three per cent
growth in sales to €174 million in an extremely competitive trading environment.
Our Spanish division serves 16 SuperValu stores in south-east Spain, including three new independently-owned stores added in 2005. In addition, the business comprises 55 Dialprix stores, of which 30 are owned by the company. Dialsur also owns and operates a chain of 17 medium-sized cash and carry outlets.
TABLE 4: NUMBER OF STORES OPENED / CLOSED
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