Co-op repays furlough cash but keeps rates relief

THE Co-op has said it will repay the Government £15.5 million it received in furlough support during the height of the pandemic but stopped short of handing back the £66 million it secured in business rates relief.

It comes after more than £2 billion in rates relief was handed back to the state by other essential retailers who continued to trade during lockdown measures.

The mutual made the announcement as it revealed its revenues increased by 5.5% to £11.5 billion during the year to January 2.

Meanwhile, it revealed that its profits after tax and discontinued items more than doubled to £77 million despite being hit by £84 million in pandemic-related costs.

Steve Murrells believes the move to hold onto the property tax relief was still “in line with our ethics”.

“It was a decision supported by the board and our membership counsel,” he said.

“We are not a company who have paid out a dividend and we don’t have the access to capital markets as other so that relief was vital.

“The furlough money was funding which we claimed for at the onset of the pandemic, and because that was money we actively claimed for we unanimously decided to return that.”

The UK’s five largest supermarkets have all repaid the rates relief, although rivals including M&S, Waitrose and Iceland have also held onto funds secured as part of the rates holiday.

The Co-op said it will not claim for extended rates support offered to firms for the new financial year.

Mr Murrells expects 2021 to be “as challenging” as last year despite the continued rollout of coronavirus vaccines. The retailer said it is working to adapt to the changing needs of consumers, including the “hyperlocalism” trend of people shopping closer to home.

It said this has helped to buoy strong food sales at its local stores, with a 6.9% jump in like-for-like food sales as it benefited from the closures of hospitality for large periods.

Meanwhile, revenues in its funeral-care business were flat for the year at £272 million despite an 11.4% increase in funerals, driven by the virus. It said revenues remained stagnant despite higher volumes due to Government restrictions which resulted in more basic arrangements for funerals.

Allan Leighton, independent nonexecutive chair, said: “Covid-19 presented us with a national emergency and a unique set of business challenges and community needs which showed that co-operation was capable of making a difference during an extraordinary time in the nation’s history.

“I am proud of how we rose to the challenge of the pandemic through our business operations and through our support to local communities.

“Creating Co-op value for our members has always been at the heart of our endeavours and I believe that reached new heights during 2020.”