Kesko has reported its 2017 results, with group net sales increasing by 1.8% in comparable terms to €10.7bn. Comparable operating profit increased by 2.8% to €296.7m.
Grocery trade: +2.4% to €5.3bn
Kesko’s grocery business, which accounts for 49% of Kesko’s total sales, saw 2017 comparable net sales increase by 2.4% to €5.3bn. The grocery trade accounts for over 68% of Kesko’s total operating profit, with 2017 grocery operating profit increasing by €27m to €203m.
Market trends: quality, economic growth filtering through to grocery
On market trends, Kesko suggested that ‘the importance of quality and selections has continued to increase’, while the growth in the economy is filtering through to the grocery market.
2017 highlights: service and quality focus, synergies and store upgrades
On the highlights in 2017, the retailer highlighted that ‘strategic concentration on service and quality increased sales and profit’. Meanwhile, the business drove synergies through the acquisition of Suomen Lähikauppa, while continuing to upgrade stores.
Q4 2017 highlights: growth across formats, new store openings and profitability
In Q4, the retailer comparable sales growth of 4.5%, with all formats reporting increases. Meanwhile, new store opening sales were ‘off to a good start’ and profitability increased at K-Citymarket and Kespro.
CEO: '2017 was a year of strong and successful transformation'
Commenting on the results, CEO Mikko Helander said, ‘In the grocery trade, 2017 was a year of strong and successful transformation, resulting in increased market share, sales and profitability. We implemented our strategy by redesigning all of our chains, with the objective of offering the most customer-oriented and inspiring food stores in Finland … We are also particularly happy with the good performance of K-Citymarket and Kespro, and the strong openings of new stores'.
S Group 2017: supermarkets +1.%, service stations and fuel +5.8%
Elsewhere in the market, competitor S Group has also recently reported its 2017 results, with supermarkets in Finland, the Baltics and Russia seeing comparable growth of 1.7% . Meanwhile, service stations and fuel saw comparable growth of 5.8%.
Kesko 2018 outlook: net sales likely to be lower due to divestments and restructuring
On what lies ahead, the results' press release from Kesko stated that net sales are expected to drop below that achieved in 2017 driven by divestments and restructuring. Comparable operating profit is likely to be higher, although there will be ‘investments in store openings and redesigns, in the expansion of logistics operations and in digital services’.
Kesko opens health, beauty and wellness chain, targeting 30 stores in 2018
In other news, the first of Kesko's health, beauty and wellness chain of stores in partnership with wholesaler Oriola KD has opened under the 'Hehku' ('Glow') banner. The first two stores opened in January 2018, with one in Helsinki’s award-winning Forum shopping centre, one of the country’s largest and busiest shopping centres. The range in-store includes ‘familiar, emerging and completely new brands’.
There are plans to operate around 30 stores by the end of 2018 and ultimately 100 stores across the country.
Lidl continues refurbishment programme
Elsewhere in the market, Lidl is continuing its store refurbishment programme, which has seen stores upgraded in stages. In February, the next phase of stores in Uusimaa, Kerava, Helsingin Ala-Tikkurila, Klaukkala, Järvenpää and Ekenäs will be upgraded.
As a result of changes in other stores, colour schemes have been changed to white and grey, while signage has been improved. The order of categories in-store has been revised, with produce being brought by store entrances, for instance. New equipment has also been introduced.
Commenting on the developments, Nicholas Pennanen, Lidl Operations Director of Finland said, 'We are investigating how our customers visit stores, for example, in which order the store is typically [shopped] and what are the most popular shelves. We combined this data with customers' wishes. This is how we got a planned order that best serves the customer, but also improves the efficiency and efficiency of our skilled personnel'.
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