The number 1 retailer in Switzerland has revealed its results for 2018. With a profit of 475 million Swiss francs [477 million USD], Migros is down 5.5% from last year. However, its profitability increased by 7.8%.
These results are due to the restructuring of the Globus supermarket chain, which penalized Migros, even though the group managed to show an increase in operating profit for the first time in four years. The revenue, already revealed mid-January, progressed by 1.4%, at 28.5 billion Swiss francs [28.6 billion USD], and the operating profit (Ebit) improved by 7.8%, at 651 million Swiss francs [654 million USD]. The related margin increased slightly by 0.2 point, at 2.3%.
On the other hand, the net profit was down 5.5%, at 475 million Swiss francs [477 million USD]. The net profit decrease can be mainly explained by the higher tax burden and by the turmoil on financial markets at the end of last year, which penalized investments at 30 million Swiss francs [30.2 million USD].
As far as online sales are concerned, the group is making many investments. “Migros is on the right track, but we must make some efforts because of the constant pressure from the competition,” explained the CEO, Fabrice Zumbrunnen. According to him, the Swiss retail giant “is showing a radiant health” and managed to increase its market share by 0.3 points, at 22.1%.
This type of business changes people’s consumption patterns and forces market players to adapt. In four years, Migros nearly doubled its online sales, at 2.1 billion Swiss francs [2.1 billion USD], thanks primarily to Digitec-Galaxus (953 million Swiss francs [957 million USD] in revenue). Over this period, the share of online sales went from 4% to 7.3%.
In 2019, the distributor expects “the operating profit (Ebit) and the net profit to rise,” said M. Zulauf to AWP. Migros plans to meet its financial goals within 2 to 3 years. The orange retail giant aims for a margin of 2% to 4% for the net profit, compared to 1.7% last year. As for the operating margin (Ebit), which reached 2.3% in 2018, Migros aims between 3% and 5%.
The group announced that if it continues to invest, it will maintain its efforts regarding prices for its clients.
Source: bilan.ch
