Musgrave’s Chris Martin to take ‘no bonus and no shares’ following UK losses
Musgrave's Irish brands increase sales and out-perform the market, but suffer in GB market
Print12 May 2014
Musgrave boss Chris Martin will receive "no bonus and no shares" for the first time since taking the job a decade ago, after recording "sizeable" losses in UK, the Sunday Independent has reported.
In its financial results for the year ended 31 December 2013, the group reported sales of €4.8 billion, which on a constant currency basis, were in line with last year. Profit, before tax and operating exceptional items, was €60 million, down 16% reflecting challenges in its business in Great Britain. Cash was well managed with net debt reduced by €19 million to €121 million. The group added that it continues to be strongly capitalised with net assets of €314 million.
Outperforming the Irish market
Commenting, Chris Martin, Musgrave Group chief executive, said: "All our markets continued to experience difficult economic conditions in 2013, impacting consumer spending. In a flat Irish grocery market our brands increased sales and out-performed the market. SuperValu was up 1.1%, Centra up 3.5%, Daybreak up 3.8% and MarketPlace up 5.3% reflecting the investment made in these brands over the past three years through our ‘Winning in the New World’ strategy. We continued to invest in our brands and in margin and cash flow support for our retail partners."
In contrast however, he reported gloomier news within the GB market, stating: "Great Britain was tough for all grocery retailers where the market is going through fundamental and permanent structural change, similar to what the Irish market experienced three years ago. Our GB business underperformed in 2013 and this is being addressed through a turnaround programme which is already underway. Against this backdrop, the group delivered a very good performance in the Irish market."
Changes to management team
In an interview with the Sunday Independent, Martin also confirmed a number of Musgrave’s UK management team have been replaced, including chief executive Donal Horgan, with former Monsoon chief Peter Ridler parachuted in to lead the turnaround operation.
"Some people have left of their own accord because of the market being so challenging and some of them have said that it wasn’t for them," Martin said. "Donal [Horgan] did step down. He did resign, he realised that it needed a different set of skills," he added.
Further explaining its UK results, the group said that in a growing convenience market, its sales in GB declined by 3%. In 2013 the GB business pursued a growth strategy but this has not delivered profitable sales. However Musgrave emphasised it is "committed to the GB market and to working with [its] retail partners to deliver a profitable business."
Peter Ridler to lead UK operation
Following the recent appointment of Peter Ridler, as managing director, to lead the turnaround, Musgrave said it is addressing the performance and implementing fundamental improvements to its brand disciplines and ways of working.
A press release issued by the group added: "In light of the 2013 GB results, the Board has determined that it is appropriate to write down €131 million of assets in GB including all of the remaining goodwill of €78 million arising on the original acquisition of Budgens and Londis, €37 million for tangible assets as well as €16 million for onerous property obligations."
Outlook
Looking towards the future, Musgrave added: "In 2014 as we enter the third year of our group strategy, we are continuing to see an improvement in sales in Ireland as green shoots appear in the economy. We will continue to invest in Ireland to build on our progress where our brands have market leading positions. We will apply many of the successes and learning from Ireland to the GB market where we are strengthening our brands and improving our offer to the consumer to ensure our retail partners can compete in an increasingly competitive convenience market. As we progress in 2014, our focus will be on driving profitable sales growth and delivering exceptional value to the shopper in all our markets."
*Profit is before tax and operating exceptional expenses of €143 million which reflect the write down of assets in Great Britain and planned investments associated with the Superquinn integration.
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