Co-op grows sales and profits but says trading remains tough

THE Co-operative Group has announced an 8% increase in sales to £6.9bn in the half-year to July 3, 2010 and a 17% surge in profits to £260m.

The Manchester-based organisation’s financial services business was the star performer, with profits on a like-for-like basis increasing by 45% to £76m. Profits at its food arm were up 13% to £151m, and a division containing its other services including travel and funeral services businesses increased its earnings by 16% to £62m.

Chief executive Peter Marks said:  “Over the last three years The Co-operative Group has been transformed, underlining the strength of our ownership model which allows us to invest through economic cycles.”

He said that the group, which now employs more than 120,000 people and has over 5 million members,   had made “further significant progress” in integrating both the Somerfield and Britannia Building Society businesses over the first part of the year.

More than 2,500 of its food stores have been converted to its new brand, including more than half of all the former Somerfield stores.

However, the group blamed the disruption of integrating the Somerfield stores for an overall fall in like-for-like sales in its retail business, which dropped by 1%. Like-for-like sales in the re-branded food stores increased by 2.5%.

“As anticipated, 2010 has been challenging so far, with tough economic conditions across all our businesses. Looking ahead, however, we do not expect things to improve until late 2011 at the earliest,” said Mr Marks.

He added that the group’s focus for the remainder of the year would be to continue with the integration of both the Somerfield and Britannia businesses “to drive efficiencies and make the most of the opportunities that come from operating across a number of business areas”.

“The work already done, combined with the various innovations and initiatives being undertaken in our businesses, will strengthen the group and enable us to put even more space between us and our competitors,” said Mr Marks.