Musgrave swings to £1.8m loss in the North despite strong sales

Musgrave Group’s main Northern Ireland operating company swung to a £1.85 million (€2.1 million) loss after tax last year from a profit of close to £2.7 million (€3.1 million) in 2020, mostly due to higher business development costs and a once-off investment to support environmental sustainability in SuperValu and Centra outlets.

Accounts filed by Musgrave Retail Partners NI last week show that turnover at the grocery retailer’s Belfast-based distribution and wholesale arm topped £308 million last year, in line with 2020.

Wholesale turnover at the company — which also directly operates 30 of the group’s more than 300 Supervalu, Centra, Mace and DayToday shops in the North — was up from nearly £238 million in 2020 to almost £243 million in 2021, while retail sales dropped from £70.5 million to £64 million last year.

Despite the inflationary environment, the company’s cost of sales declined marginally from almost £246 million during the first year of the pandemic to £244.3 million last year.

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However, in a strategic report attached to the accounts and signed by outgoing group chief financial officer Myles O’Grady, the company’s directors said “significant disruption to global energy markets” has driven cost inflation for Musgrave, its suppliers and customers.

Musgrave Retail Partners NI, which employed 815 people in 2021, down from 889 in 2020, incurred an operating loss for the year of £1.2 million, compared with an operating profit of £3.9 million in the previous year.

The directors said that the loss included a once-off £2.7 million payment to support investment by SuperValu and Centra retailers in environmental sustainability and business development costs, which soared more than 100 per cent from £. 4.8 million in 2020 to £9.8 million in 2021.

The Russian invasion of Ukraine and, in particular, its impact on energy prices has increased costs and “may trigger a recession in the United Kingdom”, the directors said. Brexit has also had “a moderate impact on product availability” and costs and requires “careful ongoing management”.

Earlier this year, the group unveiled an investment fund aimed at supporting efforts by Mugrave retailers to reduce the group’s carbon footprint by 12 per cent over a two-year period. At the time, Musgrave NI said it was committing £42,500 per SuperValu store and £21,250 per Centra store, allowing outlets to choose between various sustainability initiatives, from freezer upgrades to solar panels.

In a note attached to the accounts, the directors said Musgrave had reduced its total energy use in the North — through its transport fleet, refrigeration systems and natural gas and oil consumption — from 29.8 million kilowatt hours in 2020 to 27.7 million kilowatt hours in 2021. This is equivalent to 7,073 tonnes of carbon dioxide, compared with 7,618 tonnes in 2020, it said.

They said the group had taken actions, primarily as a reaction to the Covid-19 pandemic, to reduce the heating and cooling requirements at its offices to reflect “lower occupancy levels” and invested in modern refrigeration and lighting systems in the year.

Musgrave Retail Partners NI is part of the wider Mugrave Group, which is incorporated in the Republic and had group sales of nearly €4.5 billion in 2020.