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

Migros Group recorded very pleasing sales growth of +7.0% in 2013 and generated total sales of CHF 26.7 billion (previous year CHF 25.0 billion).

In the Retail and Industry sector, income was increased by CHF 1.8 billion to CHF 25.9 billion (+7.4%). Nominal sales growth, excluding tegut… Group, amounted to +2.3%.

In the financial services business, income fell by a total of CHF 29.1 million to CHF 898.8 million, due in particular to the low level of interest rates.
 

Income trend (sales trend) in the Retail and Industry sector

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 2013, the ten regional Cooperatives generated sales of CHF 14.5 billion in Switzerland and CHF 1.4 billion abroad (total CHF 15.9 billion, or an increase of 9.1%). Excluding the sales of tegut... Group, which this year reported a consolidated result for the first time, sales rose by 0.8% in a challenging market environment (Switzerland and abroad). With negative inflation of –0.1% across the entire range, real growth amounted to 0.9%. The market share is 15.0% (previous year 14.9%).

The supermarkets and hypermarkets saw sales increase by +1.3 % to CHF 11.5 billion. With negative inflation of –0.1%, this resulted in real growth of +1.4%. The five specialist markets (Micasa, SportXX, Melectronics, Do it + Garden and OBI) posted sales of CHF 1'344 million (–2.0%). Taking into account negative inflation of –3.6%, Migros' specialist markets thus enjoyed real growth of +1.6% on the previous year.

Sales of sustainable label products exceed CHF 2 billion for the first time: Migros was able to once again significantly increase sales of sustainable ranges in 2013. Sales of products offering social and ecological added value totalled CHF 2.01 billion. The biggest drivers of growth were the UTZ label for products from socially and environmentally sustainable farming (+59.3%), the Max Havelaar label for Fairtrade products (+17.1%), products from sustainable fishing and fish farming bearing the MSC and ASC labels (+16.9%) and the Migros Bio range (+9.1%). The entire chocolate range of the Frey brand and the full Migros Ice Tea range have now converted to bear the UTZ label. In 2013, Migros was the first retailer worldwide to introduce MSC-certified pink tuna. It also switched over to the sustainable pole fishing method for its own brand range. As part of Migros' sustainability strategy, 59 specific programmes on «sustainable consumption» incorporating 21 binding commitments to Generation M («Generation von morgen», or «the generation of tomorrow») were implemented.

As every year, the regional Cooperatives made substantial investments in constructing new stores and remodelling existing ones. The Migros network of sales outlets increased by 8 in total to 639 sites at the end of 2013. The sales area for supermarkets, hypermarkets and catering grew by 3'926 m² in total (+0.3%). The productivity per area in supermarkets and hypermarkets in Switzerland was increased by 0.9% to CHF 13'550/m² (negative inflation –0.1%). Productivity per area in specialist markets fell by
–1.1% to CHF 4'010/m² (with negative inflation of –3.6%).

Despite a highly competitive market, Catering remained steady and more or less matched its result from the previous year, generating sales of CHF 657 million (-0.2%).

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) and Le Shop.

In 2013, Denner achieved sales of CHF 2'873.2 million, equating to real growth of +1.9% with negative inflation at –0.4 %. Denner increased customer numbers by 1.4% at a total of 791 locations (+3) in 2013.

Migrol recorded sales of CHF 1'863.4 million (–1.0%), just below the level of the previous year, despite negative inflation of –4.1% on heating and fuel oils. The volume of sales grew by +3.2%.

Magazine zum Globus AG (Globus and Herren Globus) posted sales of CHF 797.5 million in 2013 (+ 2.4%) and was therefore able to underline and expand its position as Switzerland's leading premium store. Globus stores exceeded expectations to post sales growth of +2.7% and generated sales of CHF 723.5 million. The Herren Globus specialist markets generated sales of CHF 74.0 million, slightly below (–0.4%) the figure recorded for the previous year.

Ex Libris sales fell by 7.7% year-on-year to CHF 141.9 million (–1.5% in like-for-like terms). The pleasing online business, which rose by 7.3%, was unable to offset the challenging in-store business.

The Office World Group increased its sales to CHF 175.8 million (+9.7%) in the reporting year.

A difficult market environment saw Interio generate sales of CHF 170.4 million (–13.1%) in 2013. Discounting the effects resulting from the sale of Interio and Depot, the decline is –4.5%.

In 2013, the retail chain «Depot» (Gries Deco Group) was once again among the fastest-growing non-food businesses in Europe and was able to further extend its market leadership in the area of home accessories. Total sales increased by 24.8% to EUR 345.0 million and amounted to CHF 422.1 million, or +26.9%, on a currency-adjusted basis for Migros Group. In 2013, a logistics centre covering 150'000 m² was opened in Niedernberg, Germany. The branch network now has 420 sites (including partners) in Germany, Austria and Switzerland.

The fast pace of expansion at migrolino continued last year. With the 49 new shops which it opened in the reporting year, migrolino operated a total of 243 sites as at the end of 2013. Sales rose by +34.5% to CHF 301.6 million.

Le Shop increased its sales by CHF 8.6 million to CHF 158.1 million (+5.8%) in 2013. Le Shop is still Switzerland's largest online food retailer by some margin.

In the e-commerce business, Migros once again succeeded in cementing its position as the undisputed market leader. Total e-commerce sales amounted to CHF 931.5 million, of which traditional online business accounted for CHF 740.2 million (+5.1%). This includes LeShop.ch, the online operations of the Hotelplan Group, the online business of Ex Libris, Office World Group, Migrol and Probikeshop, and Micasa, Melectronics, Denner, Frey, Delica and Gries Deco. Online orders in the wholesaling business generated sales of CHF 191.3 million.

The strategic business unit Industry & Wholesaling posted pleasing growth in its target markets in Switzerland and abroad. It generated sales of CHF 5'763.5 million (previous year CHF 5'419.8 million), corresponding to growth of 6.3%. The total sales of CCA Angehrn, in which a majority stake was acquired on 1 July 2012, as well as the sales of Bergsenn AG, were included for the first time. Organic growth amounted to a pleasing 3.4%. All customer groups contributed to the growth. Migros Group sales were increased by 2.4%. Sales in wholesaling operations rose by 26.6% to CHF 983.0 million (previous year CHF 776.5 million). International sales advanced by 7.3% to CHF 513.0 million (previous year CHF 478.0 million).

In the strategic business unit Travel, the posted sales of the Hotelplan Group fell slightly by 3% to CHF1'463 million in the 2012/2013 financial year ending 31 October 2013. Net sales dropped by 6.1% to CHF 1.14 billion. This fall is due mainly to the reduced level of activities in Italy and the discontinuation of the Russian business. The development of the skiing holiday business generated in the UK was particularly pleasing and therefore marked a return to a profitable growth trajectory. Interhome and Travelwindow managed to slightly surpass their sales figures for the previous year. Falling sales as a result of the bankruptcy of Hello and the crisis in Egypt meant that Hotelplan Suisse suffered a minor setback. However, sales in the branches, the online business and in the area of independent travel all grew significantly.
 

Income trend in the Financial Services sector

Income from financial services business amounted to CHF 891.1 million in the reporting year, with interest revenue totalling CHF 759.6 million or 85.2%, constituting the main share of total income. Commission income amounted to CHF 96.0 million and other financial assets and foreign exchange dealings generated a net profit of CHF 35.1 million. In the fiercely contended mortgage market, Migros Bank achieved a growth in mortgage loans of CHF 1'289.3 million or 4.0%, thanks to its favourable terms. On the liabilities side, Migros Bank achieved a net increase in customer deposits and liabilities of CHF 1'546.1 million or 5.5%.