Co-op profits dive amid cost of living crunch
PRoFITS at the Co-op collapsed as it was buffeted by soaring energy bills and rising wages.
In an update that underlined the challenge facing British businesses, the supermarket and funeral care firm said profits fell 84pc to £7m in the six months to July 2.
The slide came despite revenues holding firm at £5.6bn.
Co-op chairman Allan Leighton, one-time boss of Asda and former chairman of Royal Mail, said: ‘The first six months of the year have been a time of challenge for us, as they have been for all businesses. We know that the current testing conditions will not ease in the second half.’
The group was hit by soaring energy bills and the need to pay higher wages, pushing costs up £50m compared with the same period last year.
Revenues at the food business edged up 1pc to £3.9bn but profits slipped as costs rose. The Co-op has a 6.5pc share of the UK grocery market, making it the seventh biggest player behind Tesco, Sainsbury’s, Asda, Morrisons, Aldi and Lidl.
The market is fiercely competitive as supermarkets battle to keep prices low and win customers off rivals.
Aldi has now overtaken Morrisons to become the fourthbiggest grocer in the UK.
Against this backdrop, the Co-op says it will invest £37m in a food strategy shake-up.
This will include price reductions across 120 popular ownbrand products, and renewed focus on convenience stores.
Shirine Khoury-haq, who was appointed chief of the group this year, said: ‘As we face into a cost of living crisis we are determined to make life fairer for our members, customers and communities in these extraordinary times, and lowering prices for shoppers is the first step in our strategy.’
Co-op group, which includes an insurance arm as well as funeral care and food, said it was taking ‘decisive’ action to cut costs and reduce its debt. It is looking to save £100m this year and £150m in 2023.
Khoury-haq said: ‘Against a highly challenging economic backdrop, we have made significant progress in strengthening our balance sheet.
‘our clear focus on developing our businesses, whilst controlling costs, improving our cash position and reducing debt, is paying dividends.’