Foodstuffs quietly feeding its empire

The $2.9 billion giant supermarket owner and operator Foodstuffs (Auckland) is broadening its presence with the development of six supermarkets worth up to $120 million.

The entity is the country's seventh-largest by revenue, behind Fonterra, Telecom, Foodland, Fletcher Building, Carter Holt Harvey and Air New Zealand.

Yet Foodstuffs (Auckland) gets little publicity. It is not listed on the NZX and is not bound to make regular disclosures. Its low profile belies its strength.

Murray Jordan, general manager property strategy for Foodstuffs (Auckland), outlined how the co-operative is on a steep growth path.

Jordan is a former AMP executive, who in October was appointed to Foodstuffs.

Now, Jordan is expanding Foodstuffs' empire.

Each new store of around 5000sq m has a project completed valuation of $15 million to $20 million, he said. The co-operative's expansion includes:

* Opening a New World at Matamata two months ago.

* A New World will open on October 18 at Te Rapa, outside Hamilton.

* A New World is being built in Rotorua.

* Construction of a New World on Tauranga's Cameron Rd is about to start.

* Development of a Pak'N Save at Sylvia Park is part of Kiwi Income Property Trust's stage two, due to start next winter.

* A Pak'N Save is almost finished at Wairau Rd on the North Shore, although it is at the centre of litigation brought by Foodstuffs rival Progressive Enterprises.

By August last year, Foodstuffs had replaced the New World at Kerikeri, in October it opened a replacement Pak'N Save at Lincoln Rd in Henderson and in November Foodstuffs opened a New World at Whangamata.

Jordan expects to soon head back to court, hoping to finish and open the Wairau Rd store.

The co-operative is preparing an appeal to the decision by the High Court at Auckland, banning it from opening the store. Jordan said all options were being considered in an attempt to open this almost-completed store.

Justice David Baragwanath last month ruled that North Shore City Council was wrong not to notify the application to build the supermarket and its decision to grant permission for the building was invalid.

A new fire station is also planned for the Wairau Rd site, and Jordan is confident building work will eventually resume. Foodstuffs subsidiary The National Trading Company got resource consent for the store and a two-appliance Takapuna station and North Shore Fire District headquarters on the corner site.

While the matter goes to appeal, Fletcher Construction is closing in the partially built store, making it weathertight and securing the site.

"The building is 80 per cent completed," Jordan said, "and we are confident it will open."

Phillips Fox partner John McRae is acting for Foodstuffs.

The Foodstuffs annual report reveals the scope of its operations nationally. Foodstuffs had a combined wholesale turnover of $6.33 billion in the year to February 27 and a 56.1 per cent share of the national supermarket business, compared with 56.3 per cent last year.

Nationally, Foodstuffs distributed $249 million to its members, up 7.8 per cent from $231 million last year.

Big stuff

Foodstuffs (Auckland) latest annual report in the year to February 27 showed:

Annual group revenue of $2.9 billion, up $158 million, or 5.8 per cent.

Distributions of $80.1 million to its supermarket-operator members, up on $80 million previously.

Net earnings of $87 million were down on the previous year's $92 million.

Total assets grew by $78 million to $872 million.

It has 63 supermarkets and more than 100 Four Square stores

The co-operative has 44 New Worlds and 19 Pak'N Saves.

Six supermarkets are planned as part of an expansion.