Co-op sells supermarkets to focus on convenience

THE Co-operative Group is to sell a portfolio of 36 larger supermarkets, as it focuses on its core convenience food offer.

It has agreed to sell Somerfield Stores (SSL), which comprises 36 trading stores and an additional non-core property portfolio, to The Food Retailer Group, part of retail investor Hilco’s group.

Although terms were not disclosed, the mutual did say that it would make a profit on the disposal.

All of the SSL properties were acquired by the group as part of its acquisition of Somerfield in 2008. The 36 trading stores will continue to trade as food stores with no planned redundancies.

Co-op Food is shifting its focus towards smaller, local convenience stores and is  encouraging customers to shop little and often.

The strategy is working well for the mutual – core convenience like-for-like sales at the group grew 3.8% in 2015 and underlying profits in the food business rose 3.3% to £250m last year.

It is already the country’s most frequently visited major retailer, according to Kantar, and it open 97 new convenience stores in 2015, with a further 100 planned for this year.

Steve Murrells, chief executive of Co-op Food, said: “The Co-op Food business is moving forwards with a clear purpose and momentum, so we can deliver a compelling, convenient and co-operative shopping experience for millions of shoppers each day.  It is essential that we have a proactive property programme in place to support our long-term growth strategy and this sale aligns with that approach.

“An important consideration for us was that colleagues would have continued employment as a result of this sale, a principle we’ve applied to previous sales, including that of our pharmacy business to Bestway in 2014.  This agreement ensures that 920 colleagues will continue in their jobs and have their terms and conditions maintained post-sale.”

Addleshaw Goddard advised the Co-operative Group on the deal, which is expected to complete in July.