Member Article

Down but not out: Rebuilding strategy underway at Co-op

Britain’s Co-operative Group has today announced pretax profits of £124m for 2014, a significant improvement on the previous year’s loss of £255m.

The return to profit is a massive milestone for the company in its bid to turn itself around. Following a high profile crisis leaving the group on brink of collapse in 2013, Co-op sold its pharmacy chain and farms raising £216m.

Now restructuring is to focus on the group’s food and funerals business, which were reported as having performed ‘robustly’.

Moreover, Co’-op’s net debt has reduced from £1.4 billion to £808m in the year, a further indicator that the group are making progress with the worst seemingly behind them.

Co-op said overall Group trading in the first 12 weeks of the current year has been positive, allowing the company to continue with its ‘True North’ strategy, whereby it aims to acquire 100 new convenience stores and refit 255 stores.

Richard Pennycook, Chief Executive of The Co-operative Group, said: “We made solid progress in 2014 as we successfully concluded the Rescue phase of our turnaround.

“The hard work of rebuilding The Co-operative Group for the next generation, and restoring it to its rightful place at the heart of communities up and down the UK, is now underway.

“We significantly reduced net debt, even after meeting our outstanding contributions to The Co-operative Bank. This followed the successful sales of our Farms and Pharmacy businesses and detailed work to ensure we have the right cost base in place.

“Our core businesses continued to deliver for customers, with their financial performances reflecting challenging trading conditions across all of our markets and the different stages they are each at in terms of Rebuild.

“A significant element of our 2014 profit relates to one-off disposal gains on the sale of our Farms and Pharmacy businesses and property disposals.

“Without these we would, at best, have broken even. Against that backdrop, and given the need to invest in all our businesses, the Board will not be recommending a dividend to members and believes that a resumption of dividend payments is unlikely until the Rebuild phase is complete and we have returned to sustainable profitable growth.”

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