Stripped back Co-op returns to annual profit

Allan Leighton
Allan Leighton

The Co-operative has today posted a profit of £124m for 2014, marking a remarkable turnaround for the Group which suffered a £255m loss in 2013.

However,  despite the improving performance, the UK’s largest mutually-owned organisation warned it would not be paying a dividend to its members until 2018.

The Co-op, which has more than eight million members, said its food and funerals business had performed “robustly”, with same-store sales in food up 0.4 per cent during 2014.

However, its insurance business was lagging and still losing money despite the three-year plan initiated to steady the business rocked after a black hole emerged in the balance sheet of its bank in 2013.

The bank has since largely been sold off, along with its pharmacy chain and farms raising £216m.

Chief executive Richard Pennycock said without the proceeds of the sales the group would have, “at best, broken even”.

He said the organisation had made good progress reducing its costs, which had fallen from £176m to £146m and it had also cut its debts from £1.4bn to £808m.

The Coop is the UK’s fifth-largest food retailer with almost 2,800 stores and last year added 82 convenience stores and refurbished more than 700 stores. It plans to expand by adding another 100 outlets this year.

Co-op Group chairman Allan Leighton said: “We lost the heart of what the Co-op was. I mean look at what’s happened to the business, it’s terrible.

“The Co-op did used to stand for something and it was in the community, membership was important. Co-operation was important, but we’ve had unco-operation, we should have been called the unco-operative. Because that’s the reality of where we’ve been.”

Last year, the Co-op recorded a net loss of £2.3bn, once one-off losses relating to its bank and its then-owned Somerfield business were taken into account.

It was forced to divest itself of a large chunk of the bank to a number of private investors, largely hedge funds, and now owns just 20 per cent of that business.