Belgian retailer Colruyt Group has posted an operating profit (EBIT) of €123 million in the first six months of its financial year, down 41.6% year-on-year, from €211 million.
The decline was driven by the company absorbing part of the cost-price inflation and a significant increase in operating expenses, it said.
The retailer reported a 5.7% increase in revenue, to nearly €5.3 billion, in the first half, due to inflation, the fuel distribution activities of DATS 24 and the consolidation of Roelandt Group.
The company's investments amounted to €228 million, as it opened new stores and remodelled existing outlets, as well as expanding its logistics capacity in Belgium and France.
It also focused on innovation and digital transformation programmes as well as renewable energy and energy efficiency.
CEO Jef Colruyt commented, "The past two to three years have been challenging, first due to the COVID-19 health crisis and then due to the geopolitical situation, which provoked the energy crisis and high inflation, among other things. We will not let this adversity throw us off balance.
"As a retailer and as the market leader, we continue to fulfil our role in society, whereby the Colruyt Lowest Prices formula continues to deliver on its brand promise. This implies that price increases are not fully passed on to the customer, nor is the high inflation on our energy and transport costs and our employee benefit expenses. As a consequence, Colruyt Group's results are under significant pressure."
Colruyt saw revenue from its retail activities increase by 3.6%, to €4.2 billion, accounting for 80.1% of its consolidated revenue in the first half.
Food retail revenue increased by 2.5% in a market environment that is highly competitive, especially in terms of price, the company noted.
Revenue from Colruyt Lowest Prices in Belgium and Luxembourg increased by 2.6% as the retail chain continued to implement its lowest prices strategy and deliver on its commitment to offer affordable food.
Elsewhere, OKay, Bio-Planet and Cru reported an aggregate revenue decline of 2.6%, due to volume declines, partly offset by price inflation.
In France, Colruyt saw a 10.7% increase in revenue, including the fuel distribution activities of DATS 24, with the Colruyt Prix-Qualité neighbourhood supermarket format offering everything shoppers need for their daily and weekly shopping.
Outlook For 2022/23
Colruyt Group confirmed that it expects consolidated results, excluding possible one-off effects, to decrease considerably in 2022/23 compared to the previous year.
Colruyt added, "The months to come will remain very challenging, with gloomy macroeconomic forecasts that will further affect consumer spending patterns.
"However, we have some valuable trump cards in our hands. Thanks to our long-standing focus on and experience in operational cost control and efficiency, and our targeted long-term investments, we as a group have strong roots to rely upon and build on."
© 2022 European Supermarket Magazine – your source for the latest retail news. Article by Dayeeta Das. Click subscribe to sign up to ESM: The European Supermarket Magazine.