Migros continues to chase record sales
Published: Tuesday, Jan 16th 2024, 17:30
Updated At: Tuesday, Jan 16th 2024, 17:30
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The Migros Group grew again in 2023. Sales rose by 5.9 percent to 31.9 billion Swiss francs. In the previous year, the "orange giant" broke the 30 billion mark for the first time.
Migros has thus moved closer to Coop. The Basel-based retail group, which is more strongly represented abroad than Migros, only increased its sales by 1.4 percent to 34.7 billion Swiss francs last year.
Migros' online business and healthcare services grew in particular, as the company announced in a communiqué on Tuesday. Acquisitions also contributed to this.
But the travel business also flourished thanks to the pent-up demand from the Swiss for vacations abroad: tour operator Hotelplan increased its turnover by almost 21% to CHF 1.7 billion. Hotelplan thus significantly exceeded its turnover of 1.2 billion francs in the pre-coronavirus year 2019.
More sales in the stores
Migros increased its retail sales in Switzerland by 4.1 percent to 24.1 billion Swiss francs, according to the report. Migros Gastronomy in particular (+10.2 percent) recorded strong growth. However, the supermarket business was also able to increase sales by a clear 3.6 percent. The new Migros CEO Mario Irminger wants to make this business much more powerful after it had lost momentum in recent years.
To this end, a separate Supermarkt AG was founded to centralize the business in the stores with the orange M under the umbrella of the Migros Federation of Cooperatives FMC. This is intended to make the supermarket business, which was previously managed by the individual regional cooperatives, more efficient. Migros boss Irminger was pleased that the company had succeeded in "gaining significant market share in the supermarket business, which is at the heart of Migros", as he explained in the communiqué.
However, he warned: "The challenges remain great. In order to continue offering our customers top services, we must strengthen our market position in the long term and increase profitability." Efficiency gains in the organization would be invested in lower prices.
There is criticism from the trade union side: the good results should lead to higher wages and a higher headcount. Unia is demanding that Migros refrain from further work intensification and redundancies in the ongoing restructuring process. In addition, fewer and fewer staff are subject to the collective employment agreement - the union is therefore calling on Migros to enter into a dialog.
Industry with progress
Progress has also been made in the second area that Irminger wants to make more profitable, Migros' own industrial operations. The increasing demand in the supermarket business has had a positive impact on the industrial operations, the statement continued. Sales rose by 3.9 percent to 6 billion Swiss francs in 2023.
Irminger had declared his intention to streamline and simplify the industry in order to get it back on the road to success. The business figures for 2022 were a disappointment: Industry's operating profit plummeted to CHF 9 million after CHF 133 million in the previous year. Migros' own production sites are now to focus on relevant own brands with a high degree of differentiation and attractive prices in order to improve their profitability.
Online growth continues
Overall, Migros has strengthened its position as the number 1 in Swiss retail, the company explained in the press release. This also applies to the online business.
This is because the boom in online retail has not stopped at Migros either. Total online sales across all areas of the Group grew by 10.3 percent to CHF 4.1 billion. The online department store Galaxus grew by 11.6 percent to 2.5 billion.
Denner was also successful. The discounter increased its sales by 4.0 percent to 3.8 billion Swiss francs. Migrolino stores, however, did not make any headway, with sales stagnating at CHF 0.8 billion.
Sales at fuel supplier Migrol even fell by 15 percent to 1.5 billion Swiss francs. The reason for this was lower oil prices and lower sales, it said.
Strong healthcare division
The Health division became a significant growth driver, particularly with the acquisition of the online pharmacy Zur Rose. It experienced massive growth of 74% to CHF 1.3 billion. The fitness studios also showed muscle (+22.6 percent).
Migros' specialist stores, however, had a tough time of it, with sales falling by 7.7 percent to 1.5 billion. Bike World, Do it+Garden, Melectronics, SportX, Micasa and OBI felt the effects of the success of online retail, wrote Migros.
The "orange giant" will announce its profit on March 26 at its annual media conference. Before that, Migros Bank will announce its annual results in a week's time on January 23.
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