Co-op profits fall despite strong performance from food business

Co-op has revealed its group annual pre-tax profits decreased to £28m for 2023, down from £268m the previous year, as the sale of its forecourt business and a challenging economic environment impacted performance.

It comes as group revenues also decreased to £11.3bn, down from £0.5bn the previous year. However, the group said revenue was 4.7% higher than last year once the impact of the petrol forecourt sale to Asda was removed.

Sales in its food business also fell to £7.3bn, from £7.8bn the previous year, again driven primarily by the sale of the petrol forecourt business. Co-op said that revenues were up 4.3% or £0.3bn excluding the impact of the sale. The group’s online sales also continued to grow to £311m, from £222m the year before.

Food underlying operating profit was also up 11%year-on-year to £154m, driven by cost efficiencies, including improvements in availability, waste reduction, optimised stock-holding, and overall reduction in cost-to-serve.

Looking ahead, the group said it is confident in the Co-op’s strategy as it focuses on prioritising growth in its business and membership.

To accelerate its growth ambition and simplify how it runs its business, it is creating three core business areas – Food Retail, Business to Business and Life Services, enabling it to more easily “capture growth in its existing markets and fully realise adjacent market opportunities”.

Shirine Khoury-Haq, chief executive of the Co-op, said: “Our relentless focus on strengthening our financial position has enabled us to navigate a highly turbulent external landscape, delivering increased value for our member-owners and planning for a future with confidence and with membership firmly back at the heart of our business. Over the last two years, our net-debt has reduced by 90% from over £900m, to £82m today. Whilst markets remain challenging, we are firmly in control of our Co-op and our destiny.

“…2024 marks a significant shift as we begin putting in place the building blocks for our strategic growth plans across our Co-op, with a focus on growing our existing businesses including increasing our share of the quick commerce market and expanding our presence within the life services sector.”