Co-op reports tumbling profits amid ‘turbulent’ conditions

The Co-op Group saw profits fall over the past year as it grappled with food inflation, rainy weather dampening convenience shopping, and the highest ever levels of shoplifting, the retailer said.

The retail-to-funerals business said it had invested millions of pounds in lowering prices as competition heated up between supermarkets.

It revealed its pre-tax profit fell by £240 million to £28 million in 2023, compared with 2022.

Co-op said that 2022’s profit figure was skewed by a boost from the sale of its petrol forecourts business to Asda.

The two supermarket giants had reached a £600 million deal to hand over its 132 petrol stations during the second half of the year.

Nevertheless, group net debt was trimmed to £82 million, from £322 million in 2022.

It also revealed that revenues dipped to £11.3 billion in 2023, from £11.5 billion the previous year.

This was partly driven by its food retail division, with sales slipping to £7.3 billion from £7.8 billion the prior year, which it also attributed to the impact of selling its petrol stations.

Grocery inflation was in double digits for the majority of 2023, and the UK experienced much rainier weather during the year which it said reduced the levels of shoppers visiting convenience stores.

Co-op also invested £90 million across the year to lower its food prices as it competes with rival retailers, including discounted prices and offers for its members.

Meanwhile, the company said it recorded its highest ever levels of retail crime in its food shops in 2023, with 336,270 incidents of shoplifting and anti-social behaviour.

This was 44% higher than the number of incidents recorded the previous year.

Co-op’s chief executive Shirine Khoury-Haq 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 £900 million to £82 million today.

“Whilst markets remain challenging, we are firmly in control of our Co-op and our destiny.”

Earlier this year, the group said it was targeting new convenience shops and planning to rapidly grow its membership programme as part of a new growth strategy.