Netto's UK profits almost halved in 2008, and global chief Claus Juel-Jensen admitted this week that the discounter had been slow to react to the financial downturn.
Speaking exclusively to The Grocer on a three-day visit to the UK, Juel-Jensen, Netto's international managing director, said the retailer's UK 2008 performance had "not been good enough".
In 2007, the Danish discounter's UK pre-tax profits were £10.4m on sales of £696m. But over-exposure in its non-food business saw profits halved, and it also missed out on the stellar growth of rivals Aldi and Lidl, which benefited in the recession as consumers flocked to their stores to buy cheaper groceries, he added.
"The market was changing and we didn't change our scope fast enough," said Juel-Jensen. "One of the main reasons was the fall in non-food. We have been depending heavily on non-food sales for our turnover and margin over the past four or five years.
"It was like we were all expecting things to go on as they had before. There were a lot of grocers that were not good enough at reading the signs in the market and changing their profile, giving the customers what they actually wanted. We as a company were not good enough at doing that last year."
Former UK managing director Richard Lancaster left Netto in November to join Morrisons after just two years at the helm. Jensen refused to lay the blame for Netto's poor performance at Lancaster's feet. "This isn't about one person, this is about a team looking at how things are developing, looking at figures and reacting."
Netto had resolved the problems in its non-food business and, under new UK MD Charles Kay, had picked up share in the first quarter of 2009, he said.
Despite its problems, Netto increased its estate to 196 stores last year, an increase of 12. Juel-Jensen said there would be fewer store openings this year as the business consolidated.
Speaking exclusively to The Grocer on a three-day visit to the UK, Juel-Jensen, Netto's international managing director, said the retailer's UK 2008 performance had "not been good enough".
In 2007, the Danish discounter's UK pre-tax profits were £10.4m on sales of £696m. But over-exposure in its non-food business saw profits halved, and it also missed out on the stellar growth of rivals Aldi and Lidl, which benefited in the recession as consumers flocked to their stores to buy cheaper groceries, he added.
"The market was changing and we didn't change our scope fast enough," said Juel-Jensen. "One of the main reasons was the fall in non-food. We have been depending heavily on non-food sales for our turnover and margin over the past four or five years.
"It was like we were all expecting things to go on as they had before. There were a lot of grocers that were not good enough at reading the signs in the market and changing their profile, giving the customers what they actually wanted. We as a company were not good enough at doing that last year."
Former UK managing director Richard Lancaster left Netto in November to join Morrisons after just two years at the helm. Jensen refused to lay the blame for Netto's poor performance at Lancaster's feet. "This isn't about one person, this is about a team looking at how things are developing, looking at figures and reacting."
Netto had resolved the problems in its non-food business and, under new UK MD Charles Kay, had picked up share in the first quarter of 2009, he said.
Despite its problems, Netto increased its estate to 196 stores last year, an increase of 12. Juel-Jensen said there would be fewer store openings this year as the business consolidated.
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