Budget brands rocket

BY KRIS HALL
Last updated 05:00 20/06/2009

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New Zealand's supermarket sector trumps any other industry in any other country right now in sales growth and expansion opportunities, Foodstuffs chief executive Tony Carter says.

"It sounds trite, but we are in the best industry in one of the best countries to be right now.

"Our sales consistently keep growing and opportunities to expand keep presenting themselves," Mr Carter told delegates at the Property Institute's annual conference in Auckland.

Although access to capital to finance development and expansion had certainly become more difficult in the recession, Mr Carter acknowledged that people "have to fill their cupboards", even in the downturn.

Collectively, Foodstuffs, which owns Pak 'n Save, New World, Four Square and Liquorland, had more than $7.6 billion worth of sales in the year to March.

Driving sales was a 22 percent lift in own-brand products.

"It really has nothing to do with anything we've done," Mr Carter said. "It's just that consumers have decided they would rather buy budget milk at $2.99 than Anchor milk at $4."

The company boasted a property portfolio worth more than $1 billion, with the focus on individual sites rather than as part of a mall or centre.

As such, values remained steady during the downtown, said Mr Carter, meaning a drop in yields was less of a problem.

"Commercial property values are under pressure it's particularly bad when you have no returns coming in. Cashflow is very important, that's why all our sites are on turnover rent rent based on a store's turnover which is the best thing since sliced bread."

IN A NUTSHELL

Foodstuffs' annual sales $7.6 billion. Employs 30,000 staff. 45 Pak 'n Save stores, 140 New World stores and 300 Four Square stores. Accounts for 30 per cent of total New Zealand retail spend. 3 million customers a week. Property portfolio worth $1b and $100 million annual capital expenditure.

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- © Fairfax NZ News

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