Colruyt Group’s six-month results clearly show that the increased competition in the Belgian food retail industry is weighing the company down. It is still highly competitive, but its margins are dwindling.
Increased market share
The company’s like-for-like turnover grew 3.7 % to 4.4 billion euro and its market share also spiked eight points to 31.89 %. However, its gross profit margin dropped from 26.2 to 25.7 % because of increased price pressure. The group reacts to every competitor’s price cuts to maintain its “lowest price” guarantee, which obviously cuts into its own margins.
Colruyt Group is trying to keep costs in check, but also continued its investments in staff, efficiency, sustainability, all focused on long-term benefits. Its net operational costs did drop 0.1 % compared to last year, down to 17.8 %.
Improved online sales
Retail represents 82.6 % of its consolidated turnover and the chain will finalize the implementation of its new Colruyt store formula at the end of the year. OKay, Bio-Planet, Cru, Dreamland and Dreambaby also generated more turnover, adding at least 7 % compared to the year before. The company’s online sales also contributed more to the overall turnover than last year.
Colruyt Group is nevertheless careful with its forecast: it hopes to reach last fiscal year’s like-for-like net result (348 million euro), because it fears the economic situation in Belgium and France will not improve anytime soon. That is why it is taking all the necessary precautions to make sure it can keep up with last year’s performance.
