Co-op Group targeting one million new members after fruitful year

Shirine Khoury-Haq

The Manchester-based Co-op group has set itself a target of signing up one million new members.

The retail giant announced the strategy with its annual results for the year to December 31, 2022, which it said benefited from reducing debt, improving its cash position, and tightening cost controls.

Revenues rose to £11.5bn, from £11.2bn, despite the sale of the petrol forecourts division which accounted for £150m of sales.

The group profit before tax was £247m, up by £190m from £57m in 2021, but also included £319m of profit from the sale of the petrol forecourt business, which completed in October.

Group net debt of £333m improved by £587m, down from £920m in 2021.

The business managed to absorb £100m of additional energy and salary inflation, and invested £37m in the fourth quarter in holding prices on key products.

It entered 2022 with targeted cost savings of £50m, increasing to £101m at half year in recognition of the challenging cost environment. The group met its target, delivering £101m of cost savings, helping to absorb rising costs.

The board said it remains confident in the strategy, as it drives growth through the core businesses via physical and digital routes to market, ambitiously grow its membership, while maintaining financial discipline and delivering on the vision of co-operating for a fairer world.

It said the confidence and strength of the strategy was evidenced by the recent amendment and extension of the Revolving Credit Facility to March 2026. It has also begun early repayments of the 2024 bond maturity, with £100m repaid in February.

The Co-op said it expects the volatile external environment and turbulent economic headwinds, including inflationary pressures to continue. However, the early action taken last year to strengthen its financial position, leaves it well placed to face into, while not being immune from, such headwinds. Costs arising from this are expected to dampen profitability in the short term, it said.

However, despite this short term impact, it said it looks forward with confidence in driving strong performances across the business areas and the Co-op over the longer term.

Delivery against the strategy will run in parallel with the clear succession plan in place for both the chair, Allan Leighton, whose nine-year maximum term ends in February 2024, and senior independent director, Chris Kelly, whose maximum term also ends within the next 12 months.

Allan Leighton said: “The inflationary challenges facing most consumer-facing businesses are well known, so for our Co-op to have delivered this level of performance over the year is encouraging.

“We are, rightly, judged by our members on both the financial and social value we can create and it’s clear that we’ve delivered on both sides of this equation. The future focus on growing membership is vital for ensuring the future success of our Co-op for generations to come.”

Chief executive, Shirine Khoury-Haq, said: “It’s clear that our early action to significantly reduce our debt, improve our cash position, and tighten cost controls, has made a significant difference to the financial strength of our Co-op and has enabled us to look forward with confidence, despite continuing market uncertainty.

“We now have an even better foundation upon which to grow our businesses.

“We’re also looking to grow our membership, putting membership at the heart of our Co-op, with ambitious plans to both attract new members, and deepen relationships with our existing members.”

She added: “And we will continue to bring our vision to life to make a genuine difference for our colleagues, members, and communities through these challenging times.

“I’d like to thank each and every one of our amazing colleagues for all of their hard work and support over the last year.”