SOMERFIELD is to shake up its store portfolio, adding scores of new branches but selling off others, including six Scottish outlets to Tesco, amid further signs the privately owned supermarket chain has benefited from its local trading strategy.
The group said like-for-like sales excluding petrol had grown by 6.4 per cent in the 12 weeks to Easter – ahead of its larger supermarket rivals – as it seeks to become "Britain's favourite local grocery shop".
Chief executive Paul Mason said the
performance was a "solid endorsement" of Somerfield's local focus.
The firm currently has about 900 stores but plans to open about 250 more over the next three years, as well as refurbishing 200 existing outlets. However, some outlets that do not fit with the local convenience store model are to be sold off.
Somerfield's owners – a consortium including property tycoon Robert Tchenguiz, private equity firm Apax and investment bank Barclays Capital – are looking to sell the business although only one would-be buyer, the Co-op, has reportedly submitted a bid. The consortium is said to be holding out for £2 billion.
Somerfield, which has 42,000 staff, has already spent £100 million in the past year revamping 250 branches. It expects the 250 stores in the opening programme to add more than £500m to sales in 2010. All the new stores will be in high streets or similar locations to fit with the chain's local focus.
The company – taken private by its current owners in a £1.1bn deal in December 2005 – banked underlying earnings of £227m on sales of £4.4bn in the year to last April.
Yesterday's plans came as Somerfield said it was selling six of its Scottish stores to Tesco for an undisclosed sum. The move will give Britain's biggest retailer a presence in Orkney, Shetland, the Isle of Lewis and Ullapool.
Outlets in Aberdeen and Paisley, where Tesco already operates, were also included in the deal. Tesco confirmed that all 470 jobs across the six stores would be safeguarded.
Tesco's corporate affairs manager, Doug Wilson, said: "These new locations are in areas that have long been prized."
A spokesman for Somerfield said: "Somerfield will continue to dispose of stores which are not aligned with its overall strategic objectives – to focus on smaller local convenience stores."
Somerfield began life as JH Mills in Bristol in 1875, but changed its name to Gateway in 1950 because the city was the "gateway to the West Country".
It dropped the Gateway name in 1994 to become Somerfield and listed on the stock exchange two years later.
In 1998 the firm bought discount chain Kwik-Save but sold the brand and the majority of its stores in 2006 after continued losses despite £130m of investment.
Kwik-Save went into administration last year.
The full article contains 473 words and appears in The Scotsman newspaper.
