Co-op Group’s pre-tax annual profit fell sharply amid intense competition from discounters and heightened costs due to record levels of shoplifting, however, its retail profits jumped 11%.
The mutual put the increase in underlying operating profit down to cost efficiencies, including improvements in availability, waste reduction, optimised stock-holding, and an overall reduction in the retailer’s cost-to-serve.
Food revenue was marginally down at £7.3bn in the year to March 2023 from £7.8bn the previous year, due to the sale of the group’s petrol forecourt business to Asda. However, revenue was up 4.3% when the impact of the sale was excluded.
During the period, online sales hit £311m, up from £222m, as it secured the top position in the quick convenience market in the second half of the year.
The group expanded its partnership with Just Eat to over 1,000 stores in 2023 as it aims to capture 30% of the overall quick convenience market share in the next four years.
Across the wider Co-op business, profits plunged to £28m, compared with £268m the previous year, although it attributed this to the sale of its petrol forecourt business to Asda.
Against “a continued challenging economic backdrop”, the company posted revenues of £11.3bn in 2023, down £200m on the previous year.
Despite the drop, the retailer’s board said it was confident in the group’s outlook for the year as it pushes ahead with plans to build its membership base to 8m by the end of the decade as it prioritises growth.
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Co-op chief executive Shirine Khoury-Haq said: “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.”
The group, which is owned by its more than 5 million members, has been grappling with intense competition from discounters Aldi and Lidl, and market leaders Tesco and Sainsbury’s.
It ended 2023 with a grocery market share of 5.4%, according to researcher Kantar, down 20 basis points on the year.
At the start of the year, the Co-op unveiled plans to boost its number of members from 5m to 8m by 2030 as it eyes a “golden era of co-operation”.
As part of the growth, the group’s food arm is planning to acquire new stores, more than double the number of new franchise locations, open 400 new Nisa shops and accelerate its share in the quick commerce market to over 30%.
Shirine Khoury-Haq added: “Our relentless focus on strengthening our financial position has enabled us to navigate 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.”
“2024 marks a significant shift as we begin putting in place the building blocks for our strategic growth plans across our Co-op, 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.”
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