Co-op profit up 35% but CEO warns it 'won't be immune to recession'

Tom Belger
·Finance and policy reporter
·2 mins read
Co-op profits rose. Photo: REUTERS/Hannah McKay
Co-op profits rose. Photo: REUTERS/Hannah McKay

The Co-operative Group’s CEO has warned the company “will not be immune” to Britain’s economic downturn even as it reported a 35% leap in profits in the first half of the year.

The company’s revenues rose 7.6% to £5.8bn ($7.5bn) in the half-year to 4 July as it benefited from the pandemic, according to its interim results published on Thursday.

It reported an “exceptional” six months for its Co-op Food and wholesale arms, with the latter supplying Nisa convenience stores since it bought the Nisa franchise in 2018.

Co-op’s grocery stores saw a seventh year in a row of like-for-like sales growth, with revenue up 5.2% to £3.9bn. “Customers shopped closer to home and ate out less frequently during lockdown,” it said.

Meanwhile Nisa also benefited from “local shopping lockdown” and greater range of Co-op products, the statement added.

READ MORE: Supermarkets hire 136,000 staff since COVID-19 hit

It recently announced plans to open a further 50 stores and create up to 1,000 jobs this year. Several other supermarkets including Tesco, Aldi and Lidl have also announced significant expansion plans, with the sector one of the few booming industries since COVID-19 hit.

Figures for the company’s funeral division also point to the grim toll of the pandemic. Funeral numbers rose 22% to 59,000, and the Co-op secured extra mortuary space.

But government restrictions led to 20,000 “simpler” services. Changes have included offering “delayed celebration-of-life events,” live-streaming funerals for those unable to attend, and cortege services that pause outside family homes.

The funeralcare division saw it revenue increase by 3.5% to £148m, with higher numbers offset by lower revenue from simpler funerals.

READ MORE: Next posts £311m in lost profit, wages, and marketing

The Co-op said it had taken a total hit of £54m from the pandemic overall, including additional recruitment and buying personal protective equipment (PPE). It expects costs to total £97m in its full-year results.

The group said it had received £33m in government support including business rate relief and furlough payments, but said it would not take the government’s job retention bonus.

Steve Murrells, chief executive of the Co-op, said: “We are living in unprecedented times, but the response of our Co-op has been exceptional and I’m immensely proud of my 60,000 colleagues who’ve helped to feed and care for the nation during this difficult period.”

But he added: “The coming months and years remain uncertain, and we know our own Co-op will not be immune to the pressures the recession brings to family budgets and to local and national economies.”