Belgian supermarket chain Colruyt has reported a 25% decline in its full-year earnings, citing high inflation, declining volumes in food stores and increasing market competitiveness in both prices and promotions.
Colruyt said its net profit fell to €288 million in the year ended March 31, against €385 million a year earlier, excluding one-off effects.
The group had anticipated a "significant to strong decrease" in the annual profit.
Colruyt, which recently announced a new distribution centre west of Brussels, expects its earnings before one-offs to further decrease in the current fiscal year. It said it would provide a full outlook in September.
Inflationary Context To Continue
'Colruyt Group expects the current macroeconomic context, which is marked by inflation, cost increases and a negative consumer confidence, to continue,' it said in a statement. 'And this in a market environment that is particularly competitive.'
The group's operating expenses climbed from 19.6% to 20% of its revenue in the year, driven by rising inflation on all key expenses, such as employee benefits and energy costs.
The combined market share in the group's main market Belgium for its largest supermarket chain Colruyt Lowest Prices, grocery store chain OKay, and the Spar brand increased to 30.8%.
The company said it would propose a gross dividend of €1.10 per share for the 2021/22 fiscal year.
Although discount chains are gaining market share as shoppers look to save money amid record inflation, for some the promise of lower prices now appears to be a disadvantage as they struggle to pass on rising costs.
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