The Co-Op Sees Underlying Profits Fall 48% In First Half
The UK's Co-operative Group has reported that underlying profits fell 48% in the first half of the year to £14 million, as the group invests in members, and sells its final 1% stake in the Co-op Bank.
Operating profit fell from £72 million last year to £51 million in this period, which the company says reflects the continuing rebuild of its businesses, and the £29 million worth of rewards that were given to members.
Overall, revenues remained stable at £4.6 billion, with increases in the Co-op's food, funeral care and legal services.
"Championing a better way of doing business for our members and their communities is what the Co-op is all about and I’m delighted that we are really starting to deliver on that purpose," said group chief executive Steve Murrells.
"Across our business we are also maintaining our commitment of re-investing for the future success of our Co-op."
Focusing on the Co-op's food business, like-for-like sales were up by 3.5%, reflecting 14 consecutive quarters of growth. Operating profit was up 22% to £77 million, while underlying operating profit was up 3% to £65 million.
The group says that it continued to make progress on its 'ambition to be the UK's leading convenience food retailer' during the first half of the year, with a number of innovations.
In July, the group appointed Jo Whitfield as the new CEO of its food business, while in May, it announced its commitment to source 100% British meat, and its aim to have 80% recyclable packaging by 2020.
In terms of expansion plans, the group has opened 34 new food stores in the first six months of the year, and says that it is on track to hit its target of 100 new stores by the end of 2017.
It is also reported that the Co-op has entered into talks to acquire convenience chain Nisa, which operates over 2,500 independently-owned stores across the UK.
The Co-op says that its markets 'continue to be fiercely competitive' against an uncertain economic backdrop, but the company remains on track to return benefits to members and communities.
In terms of food retail, the company sees inflation continuing to impact on consumer spending power, and expects competition in the convenience sector to become stronger.
"It’s been an important six months for the Co-op Group, in which we have been able to give back to our members and their communities far more than we have for many years," said Allan Leighton, independent non-executive chair of the Co-op.
"We can be proud of what’s been achieved, but we want to remain ambitious. The goal now is to spread the word further, while also deepening the relationship with our members and their communities."
© 2017 European Supermarket Magazine – your source for the latest retail news. Article by Sarah Harford. Click subscribe to sign up to ESM: The European Supermarket Magazine.