Britain's Co-op Reports H1 Loss, Says Supply Disruption Could Hit Profit
British supermarket group the Co-operative Group has reported a first half loss and warned the country's supply chain disruption would put pressure on full year profit.
The group, which is owned by its members and also provides funeral and other services, said it made an underlying operating loss before tax of £15 million ($20.7 million) for the 26 weeks to 3 July, versus a profit of £56 million in the same period last year.
The Co-op said the shortfall reflected planned investment in staff and the business, as well as significant costs, impact on sales and profit erosion related to product availability issues and the ongoing effects of the COVID-pandemic.
Revenue fell 3.2% to £5.6 billion.
'The unplanned supply chain challenges and ongoing COVID costs will bring greater levels of uncertainty. This will in turn apply pressure on our prior expected level of profitability for year end,' the group said.
The retailer's food sales, excluding fuel, saw a 6.5% increase on pre-pandemic levels to £3.6 billion, from £3.4 billion in the first half of 2019. However, it declined by 2.8% compared to the same period last year, which saw unprecedented purchasing behaviour due to the pandemic.
Wholesale revenue in food declined 14% to £688 million as contract with McColl’s Retail Group concluded, but Nisa saw an increase of more than 11% in sales, on a two year like-for-like basis, the company added.
Co-op CEO, Steve Murrells, stated, "As we continue to experience the effects of the COVID-19 crisis, it is clear that things will never be the same again. As a business and as a society, it is crucial that we learn from the last 18 months, particularly as we turn to the momentous task of rebuilding Britain and face into the continuing disruption to our business and our supply chains."
Recently, the company announced a collaboration with The Original Factory Shop, which will see the opening of up to 30 concessions in the convenience retailer's food stores in the next 15 months.