Scotmid said its trading profit for the year ended January 30, 2016, rose £200,00 to £5.7 million as its turnover fell £12 million to £371 million.

Scotmid chief executive John Brodie said the Scottish Midland Co-operative Society Ltd “delivered a strong trading performance in the context of a poor Scottish retail market.”

But Brodie warned that “additional cost pressure from the earlier than anticipated introduction of the National Living Wage will have a significant impact for the next few years.”

Brodie said Scotmid’s performance strengthened in the second half of the year.

Scotmid’s trading year to January 30 lasted 52 weeks compared to the 53 week period for the previous financial year.

“Comparable retail sales were very positive relative to the sluggish market, however one less week and the impact of some store closures saw total turnover reduce,” said Brodie.

“The society recorded a notable strengthening of our balance sheet with net assets now in excess of £91 million.”

Brodie said Scotmid Property had another year of growth helped by an acquisition and temporary income following the refurbishment of its Newbridge warehouse.

He said Scotmid’s funeral business “made steady progress particularly in the first half of the year.”

In October, Scotmid completed a merger with Seaton Valley Co-operative Society.

Brodie added: “Last year I predicted a challenging marketplace and in reality, the retail markets we operate in performed worse than anticipated, not helped by poor summer weather.

“Through a range of actions the society rose to the challenge to deliver a good year end result.

“In the context of the current retail market, the additional cost pressure from the earlier than anticipated introduction of the National Living Wage will have a significant impact for the next few years.

“The Society will therefore deliver a robust response, taking the tough decisions required, accelerating continuous improvement initiatives and continuing to innovate and drive the business forward.”