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Uk Operating Performance

In: Business and Management

Submitted By vannett
Words 2330
Pages 10
UK operating performance

We achieved strong sales growth in the year with stores open more than one year increasing their sales by 8.9%. Of this, 4.8% was due to an increase in the volume of products sold and 4.1% was due to inflation. The trend in existing stores sales growth is shown in Chart 1. On this measure, we continue to outperform the industry average.
Sales from new stores continue to be encouraging, with all formats - superstores, compact, Metro and Express - trading in line with our expectations. New stores (after allowing for closures) contributed 10.9% to our overall sales growth. For the year ahead, we expect a further useful contribution despite a smaller opening programme weighted towards the year end.
Our total UK sales increase was 19.8%.This contributed to the estimated rise in our market share from 12.0% to 13.6% (see Chart 2).
The market continues to be highly competitive. Our ongoing commitment to offer customers excellent value for money has meant we have reduced selling prices on many products.Through managing improvements in our sales mix, better buying and more efficient sourcing we have been able to limit the impact of reduced prices on gross margins which fell by only 0.2%.
We have continued our drive to improve the productivity of all areas. This has helped us to finance the significant improvements we have made to checkout service and more labour intensive departments such as pharmacies. As a result, UK wages as a percentage of sales reduced by 0.2% to 9.7% and other operating costs reduced by 0.5%. The launch of Clubcard has allowed us to target more precisely our marketing activities and improve the value for money we obtain from marketing expenditure. Clubcard has contributed to our strong sales performance which has more than offset the costs of the scheme of 0.5% of sales. For the first time in recent years, we did not advertise…...

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