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The joy is gone: Migros was still celebrating record sales of 31.9 billion francs at the beginning of the year. The winning numbers now look less rosy. Migros announced a profit of 175 million francs in 2023, as it announced at its annual media conference.
This represents a decrease of over 60 percent compared to the previous year! Then the profit was still 459 million. And even then profits had fallen significantly compared to the previous year! So right now the downward trend continues. Migros has never made a loss in its history. However, the current result is inadequate profit returns since 1985.
Signa copyist also plays a role
EBIT (earnings before financial results and income taxes) was 286 million francs (previous year: 628 million). At least the new figures provide some good news: Retail sales rose to 25.7 billion francs, compared to 24.6 billion francs the previous year. In its statement regarding its annual results, Migros stated that it also gained market share in retail, which is its main field of activity.
According to Migros, “the increase in raw material, energy and packaging costs” is responsible for the low profit return. In addition, a value adjustment of 500 million francs was required. These are logistics properties, IT projects and various other assets that “have a lower balance sheet value due to changing market conditions,” the orange giant writes. The indirect effects of the Signa bankruptcy also play a role. According to previous information, the cost to Migros was around 15 million francs.
“We need to get better at our craft now so that we don’t have to make such value adjustments in the future,” Migros boss Mario Irminger (58) says at the annual media conference.
Despite the huge drop in profits, Migros is a “financially sound company”. They have equity capital of 17.5 billion francs, which corresponds to almost 73 percent of the balance sheet total. And: “Migros remains an important economic engine for Switzerland,” Irminger promises.
Will Galaxus’ adventure in Germany end soon?
Migros managed to increase its online business last year: it achieved sales of 4.1 billion francs; This corresponds to a 10.2 percent increase compared to the previous year. The locomotive of growth was the Galaxus Group.
One-third of Galaxus’ growth came from Germany. Although Migros does not want to calculate in detail how high Galaxus’ loss in Germany is, Galaxus’s growth in Germany is still in deficit. That’s just it: “Germany is a very competitive market and there are various competitors there, including global ones, that have a dominant position,” says Irminger. For now, Migros continues to invest in its Germany adventure with Galaxus. But for how long? “We are currently discussing the extent to which we will continue to be involved there,” Irminger said.
Low-income cow health gas stations
In addition to online retail, growth was also seen in fixed supermarket business (+3.6 percent) and Migros catering services (+10.2 percent). The retail giant is also pleased with the increase in sales at Denner (+4 percent), as can be seen from the announcement of annual results. Migrol, on the other hand, suffered a loss of 15 percent. This was blamed on a “decline in volumes” and low oil prices.
Migros Bank’s revenue increased to almost 828 million francs (+17.7 percent) in the reporting year. As a result, annual profits in the banking business increased by over 30 percent to 313 million. On the one hand, Migros Bank has interest rates to thank for this: the Swiss National Bank (SNB) announced changes in interest rates almost two years ago, increasing interest rates and depositing more money into banks’ coffers. The customer base increased by 10.9 percent to 1.1 million.
The increase in sales in the healthcare sector was particularly notable: sales increased by a whopping 74 percent to 1.3 billion. Medbase Group increased sales by 95.9 percent thanks to the integration of Rose online pharmacy!
Looks like buyers have been found for Melectronics and SportX
However, Migros recorded a loss in sales (-7.7 percent) in its specialized stores. «Specialist shops are our pain point. “We’re making serious losses here and reducing our profitability,” Irminger says.
There is a reorganization here too. Migros announced in February that it would sell many of its subsidiaries. These are the travel group Hotelplan, the sports retailer SportX, the home electronics chain Melectronics and the industrial company Mibelle (“Mobile phone” dishwashing liquid, “Me” series).
When specialized stores are sold, there is an initially positive water level report: the sales process of Melectronics and SportX is already advanced. Recipients should be announced by mid-summer. Migros boss Irminger assured at the press conference that the new owners will continue to operate the stores with their own staff.
The future of Hotelplan and Mibelle is still open
However, sales negotiations are still in the early stages at Hotelplan and Mibelle. The sale must be completed by the end of the year. Migros does not want to divide these two subsidiaries, it wants to sell them as a whole. There doesn’t seem to be any buyers in sight yet.
In contrast to the specialist markets Melectronics and SportX, things are actually going smoothly at the Hotelplan travel group: the travel group achieved record sales of 1.7 billion francs (+20.6 percent). However, Migros wants to get rid of the subsidiary and sees “greater development opportunities” with its new owner.
Companies in the Migros sector, including Mibelle, are also in good shape, increasing their sales by 3.9 percent to 6 billion francs. However, Mibelle made 70 percent of its sales abroad. Migros sees better development opportunities here too with new ownership.
Other Migros brands such as Do it + Garden and Bikeworld are also being tested. Here Irminger provided news on how to proceed in the summer months.
Major layoffs are coming
As part of the largest restructuring in the history of Migros, there will be major layoffs at the company headquarters: According to the company’s own estimates, 1,500 people will be laid off. Migros is Switzerland’s largest private employer, employing 100,000 people.
While announcing his annual figures, he emphasized that there are currently 1,300 job postings at Migros. But this is only partially good news for those who will be affected by the upcoming layoffs. Internal mobility often doesn’t work well when there are structural layoffs. Only in isolated cases do those laid off have the right professional profile to fill vacant positions.
Unia union demands that Migros stop layoffs, taking advantage of the announcement of annual figures. According to the statement, Migros has been following a “systematic anti-union strategy” for years and has been pressuring its employees “to stay away from unions.”
The union believes the money is available. Despite the decrease in profits, Migros is still at a loss. In addition to the above-mentioned layoffs, Unia also demands higher wages for Migros staff.
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
