Mutual retail & services business The Co-operative Group has today reported that underlying operating profit across its food business fell 9.5 per cent to £288 million in 2012 amid what it described as “a challenging year”.
In the 53 weeks ending January 5th 2013, total food sales excluding VAT but including fuel declined 1.3 per cent while like-for-like (LFL) sales fell 0.7 per cent.
However, over its final quarter, LFLs climbed 0.3 per cent while Christmas trading also marked an improvement and overall group sales for the year climbed 1.5 per cent to £13.5 billion.
“2012 was a challenging year for The Co-operative Group., Group CEO Peter Marks conceded.
“Our core businesses performed in line with expectations in their respective markets.
“In Food, there was a marked improvement in the second half of the year, most notably with our like for like sales performance returning to growth in the last quarter.
“Overall profitability for the year, however, was impacted by the competitive environment and our continued investment in prices, the store estate and our supply chain.”
However, the Food business is committed to continuing its focus on prices while also driving expansion, with plans to roll-out new store formats during the course of the year under the retailer’s strengthened management team in a bid to improve the overall shopping experience.
During the year, Co-operative Food opened 83 new shops across the country and acquired 10 former Costcutter stores as well as Scottish convenience chain David Sands, and also worked to grow its distributionnetwork.
Last November, a new £22 million distribution centre was opened in Avonmouth to support its services and a new depot in the East Midlands is set to accept deliveries from this month.
Despite being impacted by what it called “significant inflation” with “an intensely competitive market”, the group remains optimistic about upcoming plans.
“We have a clear view of what is strategically important to ensure that the remarkable transformation of the Group over the last five years is fully embedded and can be built upon,” said Marks.
“The Co-operative Group is a great business. Our ownership model means we have and can continue to take decisions for the long term.
“The strength of our capital position enables us to absorb short term losses. We know we are making the right strategic decisions which will enable us to make the most of the significant opportunities which lie ahead for the Group.”