Coop unveils new strategy as profits decline
Profits were lowered by £37m at the Co-op during the first six months of its financial year as its sales flatlined, new figures have revealed.
The group has posted pre-tax profits of £7m for the period to July 2, 2022, compared to the £44m it achieved during the same time in 2021. It also reported its revenue stalled at £5.6bn.
The results come after the Co-op announced in July plans to cut 400 jobs, with the majority based at its head office in Manchester.
The group blamed a “tough trading environment” for the move as well as the rise in inflation. It also said will bring forward planned cuts as well as reduce roles by not filling vacancies.
In a statement, the Co-op said that “decisive management action” had been taken to reduce operational costs, improve operational performance and prioritise capital expenditure.
The Co-op also set out an ambition to make it the largest convenience retailer in the UK, promising the biggest shake-up in its near 180-year history with growth plans built on a large-scale network of franchise
It added that:
- Its net debt had been reduced through improving its cashflow. The group also said its deal to sell 129 petrol stations to Asda for £600m would also help drive down debt.
- On its sales, the group said that in “very challenging markets” it delivered a “robust” performance while Co-op Food revived its market share to 6.5%.
- It also revealed that energy and wage inflation increased costs by around £50m compared to the same six months in 2021 before “mitigating cost savings, and rates holidays in H1 2021 create a further £20m adverse variance”.
- The Co-op added that it expects cost savings to reach £150m in 2023.
- The Co-op said it had pledged to improve the pay of 41,000 front line employees of up to 5.3% while a £37m project has started to lower the prices of 120 “key products”.
Chief executive Shirine Khoury-Haq said: “Against a highly challenging economic backdrop, we have made significant progress in strengthening our balance sheet, whilst continuing to support the needs of our colleagues, members, customers and the communities in which we operate.
“Our clear focus on developing our businesses, whilst controlling costs, improving our cash-position and reducing debt is paying dividends.
“Looking ahead, while we are mindful of the continued economic challenges, we have great confidence in the underlying strength of the Co-op and all our businesses.
“Having faced into some tough decisions in the first half, focused on cutting costs and improving efficiency, we ended the period stronger both operationally and financially.
“Since then, we have progressed further with the planned sale of our non-core petrol forecourts business. This will strengthen us more and provide the means to invest in our core businesses, whilst enabling us to support our members, customers, colleagues and communities through the cost-of-living crisis.
“I’d like to thank every single one of our colleagues for their leadership in delivering our results and vision this year.”
