Report on the Financial Situation of Migros Group
Income Trend (Sales Trend)

CHF million	Total income		Change from previous year in %
	2012	2011
Cooperative Retailing	15'230.0	15'306.4	–0.5
Commerce	6'797.4	6'395.4	6.3
Industry & Wholesaling	5'204.6	5'127.4	1.5
Travel	1'214.1	1'408.7	–13.8
Others	155.0	189.5	–18.2
Eliminations (within Retail and Industry sector)	–4'522.7	–4'532.4	0.2
Total Retail and Industry sector	24'078.4	23'895.0	0.8

 

The activities of the regional Migros Cooperatives, the Federation of Migros Cooperatives and the services of the Group’s logistics companies are combined in the strategic business unit Cooperative Retailing. In 2012, the ten regional Cooperatives generated sales of CHF 14.3 billion in Switzerland and CHF 201.5 million abroad (total CHF 14.5 billion). Adjusted to take account of the non-recurring effect in the wholesaling business in the amount of CHF 78.4 million (transfer of the Migros Cooperative Zurich to migrolino), sales fell by 0.4% in nominal terms compared to the previous year. With negative inflation of 1.4% across the entire range, real growth amounted to 1.0%. The market share is 14.9% (previous year 15.2%).

The supermarkets and hypermarkets saw sales fall by 0.6% to CHF 11.4 billion. With negative inflation of 1.4%, this resulted in real growth of 0.8%. The specialist markets (Micasa, SportXX,  Melectronics, Do it + Garden and OBI) posted sales of CHF 1'370 million (+1.8%). Taking into account negative inflation of 4.6%, Migros' specialist markets thus enjoyed real growth of 6.4% on the previous year.

The Cooperatives reduced prices by an average of 1.4% in 2012 and cemented their leading position in terms of value for money. For customers, this translated into price cuts worth CHF 204 million in total, across more than 2000 products. Melectronics and Micasa implemented the largest price reductions, of 6.4% and 4.9% respectively.

Sales of label products were increased markedly in 2012, driven primarily by the Migros Bio range (+9.1%), FSC-certified products (+19.2%) and products from sustainable fishing bearing the MSC label (+12.2%). In addition, 65% of the chocolate bars at Migros produced by Chocolat Frey had received UTZ certification by the end of 2012 (cocoa from sustainable, socially responsible and environmentally compatible cultivation). The particularly energy-efficient appliances bearing the Topten label posted sales growth of 24%. As part of Migros' sustainability strategy, 87 specific programmes on «sustainable consumption» incorporating 16 binding commitments by Migros to Generation M («Generation von morgen», or «the generation of tomorrow») were being implemented. As every year, the regional Cooperatives made substantial investments in constructing new stores and remodelling existing ones, focusing on improving local sourcing. Overall, the sales area for supermarkets, hypermarkets, specialist markets and catering grew by 12'341 m2 to 1'344'738 m2 (+0.9%).

The strategic business unit Commerce mainly includes the retail companies Denner, Migrol, Magazine zum Globus, Ex Libris, Office World Group (OWiba), Interio and Depot (Gries Deco Group) as well as Le Shop.

In 2012, Denner achieved sales of CHF 2'832.8 million, equating to real growth of 3.3% with inflation at 1.5%. Denner increased customer numbers by 2.5% at a total of 788 (+24) locations in 2012, outperforming the market average and gaining further market share. Denner reduced the price of 234 products in total during 2012, some 12% of its entire product range.

Migrol increased sales in cubic metres by 2.4% with persistently high fossil fuel prices (+4.4%). Its sales amounted to CHF 1'881.6 million (+6.5%).

Magazine zum Globus AG (Globus and Herren Globus) posted total net sales of CHF 778.9 million in 2012, down 1.1% on the previous year. Taking into account a fall in average sales prices of around 1.6% and negative inflation for the year, the result for 2012 exceeded expectations. Globus thus succeeded once again in gaining market share from its direct competitors. Globus stores posted a decline in sales of 0.8%, generating net sales of CHF 704.6 million. The Herren Globus specialist markets achieved net sales of CHF 74.3 million (-4.9%).

Although Ex Libris sales fell by 8.8% year-on-year to CHF 153.8 million, it still gained market share. While growth of 5.2% marked a pleasing performance for its online business, which achieved record sales figures, in-store business remains challenging.

The Office World Group increased its sales to CHF 160.2 million (+2.6%) in the reporting year.

Interio posted a fall in sales of 19.2% to CHF 196.1 million, due in part to the separation of Depot and Interio (transfer of the 24 homeware stores and boutiques to Depot Schweiz AG). The furniture stores suffered a decline of 8.9%, 2.2% of which was due to the two-month closure of the flagship Dübendorf store following hail damage (adjusted fall of 6.7%).

In 2012, the retail chain «Depot» (Gries Deco Group) was once again among the fastest-growing non-food businesses in Europe and was able to clearly extend its market leadership in the area of home accessories. Total sales increased by 28.3% to EUR 276.4 million in Germany, Switzerland and Austria (CHF 332.7 million, or +25.4%, on a currency-adjusted basis for Migros Group). A 150'000 m2 logistics centre, built in 2012 and due to be opened at the start of 2013, considers also to the cater for the 90 new shops opened last year as well as the launch of a Depot online shop.

As at the end of 2012, migrolino operated a total of 194 sites (+20) and generated sales of CHF 224.3 million (including CHF 78.4 million from the transfer of the Migros Cooperative Zurich). The sites break down as follows: 43 (+4) stand-alone stores, 84 (+3) Migrol-migrolinos, 59 (+5) Shell-migrolinos and 8 (+8) Socar-migrolinos.

In 2012, Le Shop generated food sales worth CHF 149.5 million, thus matching the previous year's result. Le Shop is still Switzerland's largest online food retailer by some margin. 2012 was a year of numerous innovations. The pick-up locations LeShop.ch Drive and LeShop.ch Rail had an excellent start and the mobile share of sales climbed to 23% as a result of the new iPad app. The number of new customers rose by 15% (+4’200 on the previous year).

Overall, Migros succeeded once again in cementing its position as the undisputed market leader in e-commerce business, posting sales of CHF 704.5 million (+6.0%). This includes LeShop.ch, the online operations of the Hotelplan Group, the online business of Ex Libris, Office World, Migrol and Probikeshop as well as Micasa, SportXX and Melectronics.

The strategic business unit Industry & Wholesaling further developed its market position in Switzerland and abroad in what was a difficult environment, growing 3.4% in real terms. Despite negative inflation of 1.8%, sales rose to CHF 5'419.8 million (previous year CHF 5'333.2 million). The acquisition of a majority stake in Cash + Carry Angehrn and the greater market share that this secured enabled sales from wholesaling operations to increase significantly to CHF 776.5 million (previous year CHF 626.6 million). Business with Migros Group was characterised by substantial price reductions, ending 2012 0.5% down on the previous year. At CHF 478.0 million, international sales were kept virtually at the same level despite streamlining the portfolio.

The sales trend in the strategic business unit Travel was influenced by a decline in business in Italy, by lower sales prices due to price reductions necessitated by the exchange rate situation, and by the sale of the Russian business entity. Sales fell by 13.5% to CHF 1'203.2 million. The positive financial year experienced by Hotelplan Suisse is not yet reflected in the sales performance, with posted sales falling by 5.9%. Passenger numbers were very pleasing, particularly in the summer period. Interhome, Europe's leading agent for holiday homes, also saw a slight fall in sales of 2.6%. The departure of the managing director of the online provider Travelwindow brought expansion into the Scandinavian market to a halt, with posted sales falling by 5.2%. In the reporting year, the UK business, which specialises in skiing holidays, matched last year's sales result in local currency; in Swiss francs, this equates to growth of 3.6%. In Italy, the travel market slumped by over 25%, reducing Hotelplan Italia's business volume by 26.3%. Despite this significant slump and the challenging environment on the Italian travel and tour operating market, the Hotelplan Group remains committed to Hotelplan Italia. The Italian subsidiary is to be completely realigned and restructured, with a new strategy to focus the business on the core areas of expertise and concentrate on the long-haul sector and – under the previous specialist brand Turisanda – on Egypt as a holiday destination with Red Sea beach holidays and Nile cruises.