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NorgesGruppen Expects Weaker Sales In Second Half Following Bumper H1

By Steve Wynne-Jones
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NorgesGruppen Expects Weaker Sales In Second Half Following Bumper H1

Norwegian retail conglomerate NorgesGruppen has reported first-half sales of NOK 50.4 billion (€4.93 billion), a 5% increase, however CEO Runar Hollevik said that he expects a "tough" outlook for the remainder of the year.

The group said that the first half of the year was marked by 'unusually high turnover', as the combination of 'abnormally low' cross-border trade, the gradual reopening of the HoReCa sector, and continued working from home have led to increased grocery sales.

In particular, the reduced cross-border trade led to sales of Norwegian products increasing by more than NOK 1 billion, which equates to 15% growth since 2019. Its MENY banner reported sales of locally-produced food to be 17.7% higher than last year.

Continued Growth

NorgesGruppen's sales performance for the half-year period was 5.1% higher than the same period last year, which the retailer described as 'very strong growth' given that the corresponding period last year was 15% up on 2019.

It posted a first-half profit after tax of NOK 1.9 billion (€190 million), up from NOK 1.65 billion (€160 million) for the same period last year.

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While the  half-year performance follows on from a strong full-year 2020, the combination of a likely recovery in cross-border trade and tough comparatives with last year is likely to impact its sales performance in the remainder of 2021, Hollevik said.

Tough Competition

"I am very pleased with how the company has coped with the demanding situation through the pandemic and ensured a secure food supply," he said.

"We expect sales to fall and expect continued tough competition throughout the autumn and will therefore focus on continued tight cost control and good negotiations with suppliers to be able to keep prices for our customers as low as possible."

The group has already increased its promotional activity at its KIWI, MENY and SPAR brands, which have impacted its operating margin, however this was offset by a reduction in depreciation and write downs.

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It also recently announced a number of investments in sustainability, store operations, real estate and logistics, including opening a new environmentally-friendly coffee distillery in Vestby (where greenhouse gas emissions have been reduced by 85%), and continued investment in its ASKO Oslofjord warehouse in Sande.

NorgesGruppen operates the KIWI, MENY, SPAR and Joker banners in Norway.

Earlier this summer, Statistics Norway noted that alcohol sales in the country were up by a fifth, due to the near-total closure of cross-border trade.

© 2021 European Supermarket Magazine. Article by Stephen Wynne-Jones. For more Retail news, click here. Click subscribe to sign up to ESM: European Supermarket Magazine.

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