The outgoing chief executive of Scotmid Cooperative has declared the cost of living crisis will continue to be a dominant theme this year, as the society revealed a rise in profits in its latest accounts.

John Brodie will depart the Edinburgh-based co-op, which owns Scotmid convenience stores and the Semichem toiletries chain, after 20 years at the helm and more than 30 with the society overall in August. He will be succeeded by chief operating officer Karen Scott.

Scotmid reported a £1.3 million rise in trading profit to £4.3m for the year ended January 27, with the improvement attributed primarily to a cost-saving drive which has seen the organisation move to a new operating model.

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The society, which reported an £18.5m rise in turnover to £425m, noted that the financial year had been dominated by the cost of living crisis, with consumer confidence down because of soaring energy prices, high inflation, and increased interest rates.

Mr Brodie told The Herald: “I think it is a good set of results against a challenging economic backdrop, but everyone has worked really hard. We have had significant cost challenges and we have restructured the business to give a new operating model which is fit for the future. Colleagues have worked really hard to deliver that.”

Scotmid said it responded to rising costs with the implementation of a leaner structure which recognised the significant investment it had made in technology, while also maintaining its focus on controlling store costs and margin opportunities. The number of staff in the field was rationalised, resulting in a “lighter touch” which gives more autonomy to individual stores and empowers them to “deal with certain issues, rather than traditionally coming back to a head office route”.

Thirty positions were impacted by the restructuring, though Mr Brodie said alternative roles were offered to some staff while others took voluntary redundancy.

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Asked whether cost pressures have begun to ease or if there is any evidence of consumer confidence returning this year, Mr Brodie said: “We see the cost of living crisis continuing for a period of time. For the two retail businesses [Scotmid and Semichem] that certainly impacts consumer spending and consumer confidence, which is in significantly negative territory. So, a return to a more buoyant economy where people have confidence and money in their pockets to spend will benefit those businesses in the future. That said sometimes, as we have seen in the past, challenging times can bring opportunities for Scotmid, given its financial strength.”

Asked if the co-op would consider opportunities to acquire stores, Mr Brodie said: “Absolutely, we are very much open for business given our financial position. We are in the nice position of being choosy about what we want to go for, but if there are opportunities we will certainly have a look at them.”

Mr Brodie said the year in review had seen a “solid contribution” from the society’s property portfolio, which benefited from “good commercial rent reviews and lower than expected bad debt levels”, although property values were impacted negatively by the prevailing market conditions.

The value of the society’s net assets dropped by £1.7m to £120.8m because of downward property revaluations and pension movements but declared that “our balance sheet remains resilient”, with net debt falling by £3.7m to £22.2m during the year.

Scotmid Funerals, meanwhile, conducted more funerals than the previous year as customers focused on more affordable packages.

Mr Brodie added: “Our membership and community team continued to deliver funding, with donations made to several national charities and good causes as well as substantial contributions via the Winter Giving project. Community Connect awards were also presented at our AGMs and OGMs, and I'm pleased to report that the fantastic total of £295,000 was raised for our 2022/23 charity partner, Guide Dogs.”

Mr Brodie will step down in August following a “well telegraphed” succession plan. Asked what the future held, he said: “My immediate plan is to have a period of rest and relaxation and reflection. It is a pretty consuming job. I’ve done it for 20 years and I think just having some downtime [will be welcome]. I’ll then consider what I’m to going do after that.”