The loss of Costcutter has been cited as the main reason for a £3m operating loss at Nisa for the year ending 31st March.
Nisa said it had invested heavily in the last year to recruit new members and existing Costcutter retailers, however with the loss of Costcutter taking around £500m from Nisa’s sales, the group’s turnover dropped by £200m, from £1.6bn in 2014 to £1.4bn in the 12 months to April 2015.
Nisa executive Nick Read commented: “Last year was always going to be difficult. We are all aware of the ongoing and increasingly competitive market.The threat of the discounters, the impact of food deflation, the downward pressure on prices across the sector and changing consumer habits and behaviours have all produced their own operational challenges.”
Read highlighted the performance of the major multiples, saying: “all four have produced declining like-for-like sales as well as disappointing year-end results.”
He also mentioned Costcutter’s £34m loss following its move to Palmer and Harvey (P&H).
Read added: “Nisa invested in logistics, its own brand range and recruitment, to replace business we lost. Although this approach saw some success, with more than 500 stores joining us, the new business has yet to deliver the same profit levels. The situation was compounded by the lack of adequate planning for the end of the Costcutter contract, combined with some over-optimistic forecasting and a reluctance to right-size the operation – both in terms of logistics and head office overheads.”
