Member Article

Co-op feel the heat from “fierce” competition

Profits have fallen by over a third at the Co-op, amid “fierce” competition within the retail industry.

Operating profit for the food business was down 16.4% on last year, as the company say they will take every opportunity to resist the competition.

The summer rain was said to have hit convenience stores, as sales were down 2.2% overall, while the the Group’s other businesses in pharmacy and funerals saw increased revenues and underlying profit.

The Group’s banking operation suffered under the impact of PPI claims, as operating profit fell by 67.9% to £36.9m.

Peter Marks, Group chief executive, said: “A year ago I warned that we were operating in the worst conditions that I have seen in more than 40 years in business. The results we are announcing today show the full impact of that with the profitability of our two biggest businesses affected.

“The impact has been felt most keenly in our Bank which has been hit by increased impairments on lending to corporate customers and the on-going low-interest-rate environment. On a positive note however, our specialist businesses division continues to perform well and saw a strong increase in profitability in the first half.

“None of this was unexpected and we had planned for this outcome, so were well prepared. And the current environment only highlights again the strength of our ownership model that lets us plan for the longer term by continuing to invest to ensure our businesses maintain momentum and our customers are always offered value with values. We are supported in this by our healthy financial position, with a robust balance sheet and strong cash position.”

The Co-op is set to become the UK’s sixth biggest bank, as the acquisition of 630 Lloyds branches is under regulatory consideration.

Mr Peters added: “It is in times like these when our ownership model as a mutual really comes into its own. We have been able to continue to invest for the long-term development of all our businesses and to protect our customers even though we, like all businesses, have felt the impact of the tough headwinds of the unrelenting consumer downturn.”

This was posted in Bdaily's Members' News section by Tom Keighley .