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Belgian Colruyt Group has largely managed to meet expectations for its financial year 2018/19, but operational margins are under pressure from rising costs. The leader in the Belgian supermarket branch has managed to expand its market share, despite tough competition.
Rising costs
Colruyt’s turnover went up 2.1 % on a comparable base – official turnover growth is 4.5 % to 9.4 billion euros, the extra growth coming from an extended financial year in the group’s French components. Net profit went up 2.5 % to 384 million euros, but analysts point out that operational margins are under pressure due to rising investments and operational costs.
Organic growth, a growing store surface and rising prices all contributed to the progress. Belgian market share of the eponymous chain plus OKay and Spar went up from 31.8 % to 32.2 %, meaning the group once again succeeded in taking more market share away from its competitors. The chain Colruyt grew 2 %, higher-end chains Bio-Planet and Cru added 4.9 % and the wholesale division (including Spar) 3.6 %. Dreamland and Dreambaby suffered from the competition and the closing of two French stores and saw their turnover decrease 7.1 %.
Colruyt estimates the Belgian retail market is less tough on competition, but cross-border purchases continue to grow after a rise in tax on alcoholic beverages three years ago. The group expects more pressure on prices and discounts during the current financial year, as Dutch Jumbo will start its Belgian operations and Ahold Delhaize will build up steam after stating some large ambitions.
