The Chairman’s & CEO’s Review

The Migros Group's earnings before interest and taxes and effect from pension plans (EBIT) were CHF 1'148.2 million in the reporting year, 10.0% above the previous year's figure (2013: CHF 1'043.9 million). The improvement was the result of a sustainable cost management, efficiency programmes and the procurement management.

With a volume of CHF 1'640.9 million (2013: CHF 1'324.2 million), investments remained at a very high level. Migros was therefore once again a key economic partner in Switzerland in 2014, helping to safeguard thousands of jobs. Substantial investments were made in the Cooperative Retailing and Commerce SBUs in particular, with CHF 1'202.8 million and CHF 189.8 million respectively (previous year CHF 941.8 million and CHF 174.4 million respectively).

Retail sales in the core business, i.e. the net sales of all Migros retail companies (non-consolidated) rose in nominal terms by 0.8% to CHF 23.05 billion. Without Migrol, the figure for Switzerland was CHF 19.612 billion, representing an increase of 2.3%. Retail sales abroad decreased by CHF 17.9 million (1.0%) to CHF 1.817 billion. The sales decline is primarily due to the sale of Migros Deutschland's store business and to the Tegut Group and Migros France.

Sales in Cooperative Retailing in Switzerland were CHF 14.604 billion, representing an increase of 1.0% in comparison to the previous year. Supported by the campaign "Von uns. Von hier." (From us. From here.), the development of Migros' own brands was encouraging. Including other countries, sales in Cooperative Retailing rose by 0.4% to CHF 15.91 billion. The international sales of the Cooperatives were down CHF 75.9 million (5.5%) in total.

At the end of 2014, Migros' sales network included a total of 648 locations, nine more than the previous year. Six locations were closed, 15 new ones were opened, nine replacement buildings were constructed and five larger conversions and extensions were built.

Surveys carried out in the reporting year showed that customer satisfaction is very high. Migros customers are very satisfied with the selection of products, the range of services and the value for money. There is a growing demand for exchanges via the communication platforms M-Infoline and Migipedia as well as via Facebook and Twitter. This dialogue reflects the close relationship with customers.

In the e-commerce business, Migros again managed to extend its undisputed leading position on the market. Online sales exceeded the one billion mark for the first time, coming in at CHF 1.086 billion (+16.6%). The main drivers were LeShop.ch, the online activities of the Hotelplan Group, the online business of Ex Libris, the Office World Group, Migrol, Probikeshop, Micasa, SportXX, Melectronics, Denner, Frey, Delica and Gries Deco. Sales of CHF 881.7 million were generated in online retail (+19.1%).

M-Industry further strengthened its market position in Switzerland and abroad. It generated sales of CHF 6.016 billion (previous year 5.764 billion), representing an increase of 4.4%. From 01 April 2014, the figure also includes the sales of the US-based group SweetWorks.

The sales of the Hotelplan Group increased by 17.0% to CHF 1.322 billion (2013: CHF 1.130 billion). The Swiss tour operator Hotelplan Suisse, the Interhome Group and Hotelplan UK made a considerable contribution towards the organic growth. The lion's share of the increase can be attributed to the full consolidation of Inter Chalet Ferienhaus GmbH.

Migros Bank continued on its growth course. As in the previous year, there was a strong inflow of savings deposits and the volume of mortgage lending was encouraging. The balance sheet total exceeded the CHF 40 billion mark for the first time in the reporting year. Operating income and gross profit also reached record levels.

The Engagement Migros development fund was set up in 2012 to supplement Migros Culture Percentage. With this fund, the companies from the strategic business units Commerce, Financial Services and Travel undertake to invest 10% of their dividends in supporting projects in the areas of culture, sustainable development, business and sport. A total of CHF 9.8 million was made available in 2014 (CHF 6.1 million spent).

At the end of 2014, the Migros Group employed a total of 97'456 people, about 84'000 of which in Switzerland. The increase of 3.4% (2013: 7.8%) is primarily down to changes in the Scope of Consolidation. Migros continues to be the largest private employer in Switzerland. With above-average social security benefits and an appreciative working environment, it takes its responsibility towards employees seriously.

The company's success is founded on a strategy oriented to the long term in the interests of all stakeholders. In keeping with the philosophy of its founder Gottlieb Duttweiler, it is centred on social accountability and adheres to the ten principles of the United Nations Global Compact.

The healthy development of the Migros Group is based on its cooperative philosophy, its national and regional roots, and its commitment to serving the needs of its customers with professional passion and in a credible, performance-oriented and responsible way.

Migros has made a long-term commitment to protect the environment, promote sustainable consumption, interact with society and employees in a socially acceptable and exemplary way and campaign for a healthy lifestyle. The principle of sustainable development is firmly established in Migros' Mission Statement and in its group strategy. This is completely in keeping with the guiding principle of being passionately committed to improving the quality of life of its Cooperative members and its customers.