Migros boss Zumbrunnen explains “historic increase in costs”

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There are record sales, mega costs, a huge drop in profits as a result. Migros earned only 459 million francs in the last financial year. This means 209 million francs, or 31 percent less profit than the previous year. What’s the problem? “Migros’ health is good,” Fabrice Zumbrunnen (53) says in an interview with Blick’s Migros boss the day before today’s annual press conference. “But last year we had to deal with an unprecedented increase in costs.”

It costs 400 million Swiss francs! “Such a cost increase in such a short time is a historic event for Migros,” says Zumbrunnen. 250 million CHF of this is due to the increases in raw material, packaging and energy prices in the Migros sector. Since the orange giant is on a “solid foundation”, Zumbrunnen assures that there will be no shrinkage. “We acknowledged the drop in profits and raised supermarket prices for customers less than we should due to the sharp rise in prices.”

Zumbrunnen says that not only is the increase in costs reflected in the balance sheet, but also that “it hasn’t been a good year for the stock market”. However, Migros is not traded on the stock exchange, in addition to Migros’ financial results, foreign exchange rates also affect it.

Migros boss, who passed the wand to his successor Mario Irminger (57) at the end of April, emphasizes that “none of the 10 regional cooperatives are in the red”. Last year, there were reports in the press talking about losses in some Migros regions. “This is all speculation, rumors we’ve never commented on,” Zumbrunnen said in an interview.

Clustering risk Migros Bank?

Zumbrunnen says that Migros is also facing increasing costs this year. “But we hope to be able to work with lower cost increases throughout the year and offer our customers lower prices again,” says the Migros boss. In the past weeks, the first price reductions have already been passed on to customers. Overall, Zumbrunnen expects “annual control of two to three percent of the Migros supermarket business.”

But one thing is clear: “Migros must continue to work on its efficiency.” And it should be able to trust that Migros Bank will continue to generate impressive profits.

Migros financial institution contributed 240 million Swiss Francs to Migros Group’s profits. In other words, 52 percent of the profit comes from Migros Bank. A cluster risk? “Our bank is actually very important to us and continues to grow,” says Zumbrunnen.

But other areas, such as the healthcare and travel business, have also done a “great job”. “We are very confident that things will get a little easier this year and profits will increase again.” Time will tell if it will be enough to break the resale record. Last year, Migros group sales exceeded CHF 30 billion (+4.2 percent) for the first time.

Collaborating with more profits and lower costs?

Migros’ rival Coop made a profit of 562 million francs last year. This is 3 million more than the previous year. When the figures were released in February, Coop spoke of a “challenging economic environment”. Sales may also increase. Like Migros, Coop announced that it was no longer profitable due to the increase in costs.

According to the Basel retail giant, the cost increase of about 250 million francs was borne by the company itself and therefore at the expense of profits.

Source :Blick