RECORD levels of shoplifting in its food stores failed to dampen the Co-operative Group’s performance as it increased profits in its grocery business last year and signed up one million new members while investing more than £90 million in cutting prices across 770 key product lines.
Operating profits in the food business for the 53 weeks ending March 2023 surged 11% year on year to £154m from £139m in 2022 despite a 6.4% fall in sales to £7.3 billion, fuelled by the sale of the Co-op’s chain of petrol forecourts to Asda in 2022. It attributed this growth to enhancements in cost efficiencies including improvements in availability, waste reduction, and optimised stockholding.
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However, overall group pre-tax profit fell to £28m, down from £268m in 2022, while underlying Ebitda was “broadly flat” at £468m, down from £473m reported at the same time last year.
The Manchester-based group said that all business units delivered underlying revenue increases in the year. “Against a continued challenging economic backdrop, the group delivered a robust sales performance,” it said. “Excluding the impact of the petrol forecourt sale, revenue increased 4.7%, or £0.5bn.
Online sales also increased, reaching £311m, up from £222m in 2022. “We secured the top position in the quick convenience market in the second half of the year (Neilsen), expanded our partnership with Just Eat to over 1,000 stores, and aim to grow from 23% currently to capture 30% of the overall quick convenience market share in the next four years,” the group noted.
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Group chief executive Shirine Khoury-Haq said that while the retail business faced challenges due to increased levels of shoplifting and inflationary headwinds, it had bolstered its financial position through “relentless focus” and “navigated a highly turbulent external landscape, delivering increased value for our member owners and planning for a future with confidence and with membership firmly back at the heart of our business”.
She added: “Over the last two years, our net debt has reduced by 90% from over £900m to £82m today. While markets remain challenging, we are in firmly in control of our Co-op and our destiny.”
The retail-to-funerals business, which is owned by members not shareholders, doubled down on plans to boost its membership. “Our success in attracting new members has seen us surpass our expectations with new sign-ups last year higher than the previous two years combined,” Ms Khoury-Haq noted.
“This momentum has continued into 2024 as we now stand at 5.2 million active member owners, and we expect to continue this journey and substantially increase the number of member owners to eight million by 2030.”
She added that 2024 would mark a “significant shift” as the business begins putting in place the building blocks for its strategic growth plans across the group with a “focus on growing our existing businesses including increasing our share of the quick commerce market and expanding our presence within the life services sector”.
Across the UK, the Co-op operates over 2,400 food stores, over 800 funeral homes and provides products to 5,000-plus other stores, including those run by independent co-operative societies and through its wholesale business, Nisa Retail Limited.
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