Smaller food groups' growing plans

WITH large food retailers flexing their muscles with impressive boosts in sales or profits it is fair to ask: do the big just get bigger while the smaller and small go to the wall?

Analysts, shareholders and the public will get some impression of how life is for the non-juggernaut retailers next week when Bud-gens and Somerfield report final results.

They have hard acts to follow. This week Safeway announced a better-than-expected 6.4% like-for-like sales rise in its first quarter and last week Asda lifted annual profits to GBP 405 million.

Market leader Tesco did show a slight drop in sales growth last month to 4.8% in its first quarter, and Sainsbury's will probably give some idea of how it is trading at its annual meeting next Friday.

Somerfield is seen turning in pre-tax, pre-exceptional figures of around GBP 110 million, and Budgens about GBP 11 million. But most analysts are more optimistic about Budgens' future prospects.

The Somerfield picture has been clouded by its merger with Kwik Save. This made it the fifth largest in Britain but has brought, in the words of one analyst, "a nightmare" integration job.

Exceptional items, including redundancies and closure of the Kwik Save head office, could run to GBP 150 million.

Also, the company has a GBP 1 billion five-year upgrade plan. Scepticism also continues about Somerfield's assertion that it can prosper through smaller High Street stores. "You wonder whether the High Street is the place to be," an analyst said.

Budgens, however, is positioning itself well in the convenience sector - seen as possessing strong growth. Its acquisition of the 7- Eleven chain, renamed B2, has been favourably received. Also, there is enthusiasm for the plans to expand its joint-venture Q8 petrol- station forecourt convenience stores. "They have a good infrastructure for that. We think it is quite exciting," one analyst said.

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