‘Back to basics’ working for Co-op
A RETURN to the Co-operative Group’s core values is helping it on the long road to recovery as it continues a three-year turnaround and improvement plan.
Led by chief executive Richard Pennybrook and new chairman Allan Leighton, the Manchester-based mutual is slowly clawing its way back from near extinction in 2013 and yesterday reported a profit of £124m for 2014.
After cutting its stake in the Co-op Bank from 100% to 20% and offloading its pharmacies and farms business to generate nearly £900m to reduce debt, Pennybrook and Leighton said 2014 was effectively a “break-even year”.
Speaking to the media both men reiterated the key to the turnaround was putting the heritage of the 150-year-old Co-op back at the heart of its strategy, as well as focusing on reducing the 700 large stores in its portfolio and building on its convenience store estate, with 82 more acquired last year.
Asked whether the Co-op had lost its uniqueness compared to tits rivals, Leighton made a passionate defence of the group’s position in the market.
“There is a lot that’s different with the Co-op, we’ve just got to get back to it,” he said.
“We are more about convenience in the community than anyone else and you can see that it’s having an element of success.
“We’ve got 8.5 million members and they have stood by us loyally over the last few years. We are looking to make the Co-op meaningful and unique to us and we are moving back there at a pace.”
Pennycook said the Co-op had enjoyed like for like growth of 3.2% in its convenience stores, in a food market which was “a pretty tough place to be at the moment”.
And he echoed Leighton’s comments when he looked forward for 2015.
“It’s going to be another year of hard work, in particularly focusing on a distinct Co-op at the heart of the community where our members live and work,” he said.
“The whole organisation has turned the corner. It’s early days for our new strategy, but where we’ve made investments we are going to get growth.
“It’s a pretty tough market with deflation at the moment. It’s a big estate. We’ve got 2,800 shops, we’ve got a lot of work to do to get them into the shape we need them to be in.”
He said that £300m had been invested in the 82 new convenience stores. But the organisation is looking to reduce its larger stores by up to 50 to 75 a year as it continues a rationalisation strategy.
“We are in no panic or rush,” he said. “We will recycle these in the market and invest further in our convenience estate.”
In Manchester, Pennycook said there were no plans to sublet space at the Angel Square headquarters following the £640m sale of the pharmacy business to Bestway last year.
“The building will continue to be occupied by Co-op colleagues,” he said.
Pennycook said the Co-op was in the process of re-launching its membership proposition but it was too early to go into specific details.
Despite the considerable improvement in its finances, the group has said it would not be paying a dividend until the end of 2017 and the completion of its “rebuild” phase of its turnaround.