Co-Op Drives Forward With Revitalised Operation

The Co-operative Group has made further progress in revitalising its business after reporting a 17.6 per cent rise in annual profits.

The improved performance from the group, which employs 65,000 in food and specialist retailing, banking and insurance, comes ahead of a proposed merger with United Co-operatives.

The tie-up – creating the world’s largest consumer cooperative – is subject to members’ approval, but could be completed by July.

The figures, published yesterday, showed that one of the strongest areas of trading improvement came in food retailing, which accounts for almost 42 per cent of group revenues.

Like-f or-like sales improved 4.4 per cent in the 52 weeks to January 13, while profits rose 29 per cent to pounds 92.5 million as the firm sought to improve store formats, product ranges and service. The progress has continued into the new financial year, with the Co-op seeing like-for-like sales growth of seven per cent in the first quarter.

Across the Manchester-based group, profits were up to pounds 318 million, compared to pounds 270 million last year. Group revenue before reinsurance premiums fell by 0.7 per cent to pounds 7.3 billion, but adjusting for the 53rd week in 2005, revenues would have been up 1.2 per cent.

Chief executive Martin Beaumont said: “2006 was a year in which we changed our emphasis, from consolidation to expansion and new business opportunity.

“Our food business delivered impressive sales and profit growth. Our funeral and pharmacy businesses expanded as a result of acquisition and organic growth, and we launched a new legal services business.”

He said that in addition to this, the group had rejuvenated its brand, placed membership back at the heart of the business, introduced a share of the profits payment for members and improved the engagement and commitment of staff.

“We are in much better shape than this time 12 months ago – a position that validates our overall strategy and confirms the choices we have made, however difficult they may have been at the time,” he added.

Co-op’s funeral and pharmacy businesses also expanded as a result of acquisitions and organic growth, leading to profits growth of 61 per cent and ten per cent respectively to pounds 25.9 million and pounds 17.7 million. The pharmacy arm also benefited from a rebranding exercise as sales increased by 16.4 per cent to pounds 342 million. It is the UK’s third largest community pharmacy business. The Coop’s new legal services oper-ation made losses of pounds 600,000, but this was much less than expected after posting sales of pounds 1.9 million.

But an area of disappointment was in travel shops. With package tour operators under increasing pressure to attract holidaymakers, many were forced to cut commissions.

(c) 2007 Birmingham Post; Birmingham (UK). Provided by ProQuest Information and Learning. All rights Reserved.