Foodstuffs continues its growth

Foodstuffs South Island is closing in on being a $3 billion company as the company has reported its 28th consecutive of revenue growth in the year ended February.

Foodstuffs is a co-operative which operates New World, Pak'n Save, Four Square and Pams brands.

The group reported revenue of $2.97 billion for the year, an increase of $96 million, or 3.3%.

Chairman Robin Brown said with little evidence of price inflation in the market until the last quarter of the financial year, the growth was driven
by the successful opening of Pak'n Save Queenstown, New World Ferry Road and West Melton Four Square.

Same-store sales growth was solid across retail banner groups.

The gross profit was up 4.8% to $341.9 million, other income was up slightly at $159 million and operating expenses increased by $11 million.

Mr Brown said the drivers behind increased expenses were similar to last year. As increased volumes shifted through Foodstuffs' supply chain, additional volume-related costs rose. The investment in retail stores, distribution centres and information technology capability resulted in higher depreciation expenses.

The operating profit increased $13 million to $280 million, or 5%.

Distribution to members, consisting of rebates, dividends and imputation credits, were $273.4 million, up 4.6%.

Mr Brown said Foodstuffs had continued its practice of paying monthly rebates based on pallet, build and repack purchases and distributing those, together with supplier driven rebates, to members during the year.

In total, $196.3 million was distributed to members in that manner.

The board also declared a loyalty rebate of $54 million.

Looking at the wider picture, Mr Brown said New Zealand's ''value proposition'' was at some stage straightforward. But with the start of healthy eating and niche markets, retail had grown much more complex.

''Shifts in household size, ethnicity, make-up and income, coupled with changing work and lifestyles, have dramatically affected New Zealand's food purchasing behaviour.

''Time is a precious commodity today. People are working longer hours, with fewer choosing to be full-time homemakers.''

For consumers, buying the makings of a meal was not enough, he said.

They were also looking for convenient meals. Consumers wanted food that had a minimal impact on the environment, sustainably sourced and produced with minimum preservatives.

Foodstuffs was placing more focus on its stores providing better and more choices of food on-the-go, offering healthier easy to cook prepared meals.

Since 2008, demand for prepared meals had grown considerably, Mr Brown said.

The group's philosophy of ''Feeding the South Island'' was ingrained and had strengthened over time.

However, not a year went by where Foodstuffs did not report how challenging and demanding the year was. But the business was about facing those challenges and overcoming them, he said.