Subscriber login Close [x]
remember me
You are not logged in.

Co-op profits halved as they continue to implement turnaround strategy

Published:  26 September, 2016

The Co-operative Group saw profits drop to £17m in for the first half of the financial year, but revenue rose by 2.2% to £4.7bn compared to the same time period last year.

The Co-operative Group saw profits drop 47% to £17m for the first half of the financial year, but revenue rose by 2.2% to £4.7bn compared to the same time period last year.

The results cover the 26 weeks ending on 2 July 2016.

The food business for The Co-op drove much of the growth in revenue, with overall like-for-like growth up 3.1%. Profits for the food business however, which dropped from £36m,  weredown heavily as the business increased pay for employees, but also had to invest in overall food price reductions to remain competitive.

The convenience channel continues to be a point of focus for the retailer with like-for-like sales up 4.3%. Own label products for the retailer have been performing well with sales up 5.1% for the period and bringing the total value of its private label ranges to £1.3bn.

During the first half of the year the retailer disposed of 70 stores but added 30 new stores. Many of the larger stores are being swapped for smaller convenient store formats. However, also during H1 2016 the Group announced it would be unloading 298 stores to the McColl's Retail Group. The sale, worth £117m, is expected to be completed in November.

Richard Pennycook, Group chief executive, Co-op said: "We are able to invest for the long-term, strengthening the appeal of our products and services, because our business model allows us to pursue this unique approach ... This approach is evidenced by the continued reshaping of our Food store portfolio to support our own-brand, convenience-led strategy.  This means we can, as necessary, forgo sales growth in order to ensure we have the right stores in the right places for our customers."

According to recent Kantar Worldpanel figures The Co-op on the grocery side of the business has been doing well. "The Co-op renaissance continues showing growth for the sixteenth month in a row.

"Co-op continues to outperform the market with sales growth of 3.1%, primarily through its own label lines," said Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel.