// Co-op expects ongoing inflation to affect profits
// The retailer saw a £300m increase in sales to £11.5bn in 2022
The Co-op sales grew by £300m in 2022 but the mutual warned that inflation would hit profits in the short term.
The retailer said: “We expect the volatile external environment and turbulent economic headwinds, including inflationary pressures to continue. However, the early action taken last year to strengthen the Co-op’s financial position, leaves our Co-op well placed to face into, whilst not being immune to such headwinds.
“Costs arising from this are expect to dampen profitability in the short-term.”
Sales hit £11.5bn over the year, as the retailer said that action it took against the tough economic backdrop paid off.
Underling EBITDA dropped £15m to £490m, however, an underlying operating profit of £100m was maintained from the previous year.
The group pointed out that it absorbed an additional £100m of energy and salary inflation over the year.
It had set a £50m target for cost-savings at the beginning of 2022, however, it achieved its revised target of £101m savings after it raised the figure at the half year stage in recognition of the “challenging cost environment”.
Group profit before tax rose £190m to £247m, driven by the £319m profit it made from the sale of its petrol forecourt business to Asda.
The Co-op managed to reduce debts by £587m over the year.
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Food revenue was up by £134m to £7.81bn, while wholesale revenue up by £53m to £1.44bn. The number of transactions a week increased by 5% to 16.4 million.
Online revenue increased 24% to £222m during the period.
The retailer said it remains confident in its strategy to drive growth through core businesses via physical and digital routes to market, but expects the volatile external environment and turbulent economic headwinds, including inflationary pressures to continue.
Co-op chair Allan Leighton said: “The inflationary challenges facing most consumer-facing businesses are well known, so for our Co-op to have delivered this level of performance over the year is encouraging.
“We are, rightly, judged by our members on both the financial and social value we can create and it’s clear that we’ve delivered on both sides of this equation. The future focus on growing membership is vital for ensuring the future success of our Co-op for generations to come.”
Co-op CEO Shirine Khoury-Haq said: “It’s clear that our early action to significantly reduce our debt, improve our cash position, and tighten cost controls, has made a significant difference to the financial strength of our Co-op and has enabled us to look forward with confidence, despite continuing market uncertainty.
“We now have an even better foundation upon which to grow our businesses. We’re also looking to grow our membership, putting membership at the heart of our Co-op, with ambitious plans to both attract new members, and deepen relationships with our existing members.
“And we will continue to bring our vision to life to make a genuine difference for our colleagues, members, and communities through these challenging times. “I’d like to thank each and every one of our amazing colleagues for all of their hard work and support over the last year.”
