Somerfield's store refit programme has hit the buffers, analysts fear, as the grocer searches for the right roll-out model to drive higher sales densities.
The chain has refitted about 30 per cent of its portfolio, but management have refused to state their future refit plans.
In a note, broker Merrill Lynch expressed concern that Somerfield may struggle to deliver the same sales uplifts and returns generated from conversions so far, because the remainder of the portfolio comprises stores that have lower sales densities than those overhauled to date.
The broker said that the programme is key to Somerfield's recovery. 'Our concern is that the sales uplifts and margin build may be proving more difficult to achieve in stores less receptive to refit,' said the broker.
'There is nothing inherently unusual in this and management appears to be making sensible strides to address the issue. However, with only 30 per cent of the Somerfield fascia refitted and with 414 stores in a very varied portfolio awaiting treatment, we wonder whether this will become a recurring theme.'
A Somerfield spokeswoman insisted the refit programme had not stalled and that up to four shops a week are being improved. She refused to comment on how many stores the programme would take in this year, and said: 'We are constantly reviewing the programme and the costs involved to get the right results.'
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