Although sales will increase slightly this year, Colruyt Group expects a significantly lower profit due to rising raw material prices and increasing price competition. CEO Jef Colruyt said this at the shareholders meeting.
"Competitors throwing promotions around"
Despite the relaxation of the corona measures, Colruyt Group still expects a slight increase in sales in the current financial year. But the retailer also sees that the competitiveness in the market is increasing, both in terms of price and promotions. "Competitiveness increased even more during the holiday season and we expect this to continue during the rest of the financial year", says the CEO. As a consequence, the net result will be significantly lower than last financial year.
"Competitors are throwing promotions around. At the same time, there is inflation. Suppliers are raising their prices. This is not happy news. I know. This year we really have to fight," Jef Colruyt explains to newspaper De Tijd. The difficult circumstances are not a reason for the retailer to change its long term strategy or its lowest price guarantee. "The group continues to closely follow the evolutions in customer behaviour and will, if necessary, react appropriately", he says.
Colruyt Group has been struggling with a declining market share in Belgium for some time now. The retailer is less strong than its competitors in the proximity store segment, which received a boost as a result of the pandemic. "Our local shops make up 20 percent of our turnover. Some competitors have half or more", confirms operations director Marc Hofman in the newspaper.
But he preaches calm above all: "We did not go after market share in a panic. We have not bought market share. Our market share is the result of what we do. By working hard we will find solutions."