Less than a week after reporting the first loss in its history, buying group Nisa has written to members to inform them of proposed price increases and rebate reductions.
Following a board meeting on Tuesday, new CEO Nick Read emailed members explaining that “current trading has deteriorated in June after a solid start to the quarter.” He outlined that as a result of this Nisa “must take decisive action now to get back on track”.
Three key changes are being introduced with immediate effect. These are: realigning prices while maintaining a competitive position from 1 July, reducing selected member rebates by 50% from 1 August until the end of the financial year, and reducing the subsidy for leaflets by 50% from 14 September.
“These actions will secure our financials in the short term, bolster our short-term profitability and meet our financial arrangements,” said Read. “And the tactical reduction in member rebates will be returned to the membership at the end of the financial year in line with any over-performance against our EBITDA target of £7.2m.”
He added the changes were “necessary for ongoing trading”.
The email was sent ahead of a series of regional meetings with members being held this week and next, in which Read intended to outline his recovery plans and canvass views on the proposed changes to the group’s governance outlined in a review by Lord Myners earlier this year.
Read told The Grocer last week that the group’s research showed it was cheaper than Booker and Bestway and that part of the turnaround strategy was to communicate this better.
However the claim was dismissed by Booker CEO Charles Wilson. “In terms of price, the gap versus Nisa is wider than it’s ever been. Against any of the symbols, quite frankly. We’re very happy with both the price and the service. Service is very good. Availability really matters when it’s hot. So we’re having a very strong time of it,” he said.
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