Investment: Budgens serves up 10% profit rise

BUDGENS, the supermarket group, continued to make progress yesterday with a 10 per cent increase in half-year profits and an encouraging statement on current trading.

Like-for-like sales have strengthened and are now running 3 per cent higher than the same period last year, compared to 2.5 per cent higher in the six months to 8 November. The refitting programme at b2, the former Seven-11 convenience store chain acquired last year, is also on track.

The results cap an eventful period for Budgens. In September the company followed Somerfield to become the second food retailer to walk away from merger discussions with Booker, the troubled cash-and- carry operator.

In the same month Budgens paid pounds 500,000 for Teleshop Services, a home- shopping group that will lay the foundations for the Budgens home delivery service that will be launched in the summer.

Although corporate activity has been unusually in evidence at Budgens, the company has made the mistake of taking its eye off the ball with its main business. Reporting a 9.8 per cent increase in first-half profits to pounds 6.4m, John von Spreckelsen, the chief executive, said the company had refurbished another 14 Budgens outlets. As well as refits, the stores are getting an improved fresh goods offer and a better own-label range.

All the Seven-11 stores have been rebranded as b2, although only two have been re-fitted. Sales have been affected by the disruption of moving the logistics centre, but tests are under way on a new format. This concentrates on goods for immediate consumption, such as sandwiches and drinks and newspapers and magazines. Meanwhile, Budgens has opened another 20 outlets on petrol station forecourts.

The shares edged 1.5p higher yesterday to 67.5p. This is still some way off their peak in the autumn, when merger excitement was at its peak. But on full-year forecasts of pounds 14m the forward multiple of 14 does not look demanding.