Co-op finally heads back into the black

THE recovery at funeral homes and supermarket owner the Coop Group appears to be on track after rising sales at its convenience stores – as well as an ‘unprecedented death rate’ – helped push it back into the black.

the company, which has been engulfed by a crisis at its banking arm in recent years, notched up profits of £36m in the 26 weeks to July 4, having made a £9m loss in the same period last year.

Since losing control of the Co-op Bank after a rescue deal saved the lender from collapse almost two years ago, the troubled group has become increasingly reliant on its grocery business.

its focus on its smaller convenience stores rather than bigger supermarkets is paying off.

Although grocery sales were up 0.8pc during the period, convenience stores registered a 3.3pc rise. Overall, profits at the grocer business rose 20pc to £120.4m.

this is in marked contrast to falling sales at bigger rivals such as tesco and Asda.

As part of its three-year plan to revive its fortunes, the Co- op opened 35 convenience stores, hired 1,000 staff and spruced up its shops. it is investing £125m a year into its grocery business, with much of this earmarked for price cuts, as it tries to hold its own in the supermarket price war.

But the chief executive Richard Pennycook said price cuts and investment would continue to weigh on profits. he added the group would probably break even over the full year because of investment and rising costs.

Last year’s £216m profit included the proceeds of disposals, as the group was forced to get rid of its farms and pharmacy businesses.

the Co-op also benefited from the misfortune of others.

its Funeralcare business enjoyed its busiest start to the year due to an ‘unprecedented high death rate’, attributed to a colder winter than the previous year.

income from funerals rose almost 12pc, as the Co-op also opened 12 new funeral homes.