Despite record levels of shoplifting in its food stores, the Co-op increased profits in its grocery business last year as it signed up 1 million new members and invested more than £90m in cutting prices, including introducing special discounts for members.
Profits rose 11% year on year to £154m despite a 6.4% fall in sales to £7.3bn, driven by the sale of the Co-op’s petrol forecourt chain to Asda. Underlying sales rose 4.3%, excluding the impact of that deal, although that was still well behind the pace of grocery inflation.
Shirine Khoury-Haq, the chief executive of the Co-operative Group, which has almost 2,400 stores and serves 5,000 independent retailers via its wholesale arm, said it had faced “challenging trading conditions, volatile markets and ongoing financial headwinds” in the past year but would now “continue to move our Co-op into a position of growth, with our member-owners firmly at the heart of all we do”.
She said markets remained challenging in 2024 with the “cost of living still biting and interest rates still high” but the group was “putting in place the building blocks for our strategic growth plans”. The plans include signing up 400 independent retailers to its Nisa wholesale group.
The Co-op Group, which includes funeral care, legal and insurance arms, plans to open franchise outlets in hospitals and petrol stations this year and invest £100m in special member discounts on more than 100 product lines. It now has 5.2 million members, up 14% on last year, and is aiming for 8 million by 2030.
It is also planning to step up growth in the rapid grocery market by partnering with companies such as Just Eat. This part of the business achieved online sales of £311m last year, up from £222m the year before.
Total group sales slipped by 1.7% to £11.3bn because of the sale of the petrol forecourts business, with all continuing businesses reporting growth. Pre-tax profits for the group slumped by almost 90%, to £28m, but when factoring in the one-off £319m profit from the sale of the petrol forecourts arm in 2022, the group bounced back from a loss.
Profits were better than expected, the group said, because it had met its target of attracting 1 million more members three years early and had found efficiencies to offset £200m of inflation in pay, energy and higher bills from suppliers. However, the Co-op Group said it had lost £70m from shoplifting after a 44% surge in retail crime last year to about 1,000 incidents a day.
Khoury-Haq’s pay rose 7.5% to almost £1.7m after she received £844,000 in bonus payments for hitting targets including profits, membership numbers and supporting local communities. She will receive the same amount in two years’ time if she remains with the group, according to the Co-op’s annual report, also published on Thursday.
Khoury-Haq said the group had cut its net debts by 90% to £82m, from £900m two years ago, helping it to weather a “highly turbulent external landscape”.
“While markets remain challenging, we are firmly in control of our Co-op and our destiny,” she said.
Denise Scott-McDonald, the president of Co-op’s national members’ council, said members were shopping more often as they were saving almost three times more a week than under the previous rewards scheme.
