The Co-op has reported healthy annual results, buoyed by its acquisition of Nisa and strong performance in food, although it warned of more challenging times ahead.
In the year to 5 January, the group’s total revenues grew by 14% to £10.2bn with pre-tax profit from continuing operations climbing 27% to £93m. Underlying pre-tax profit remained flat at £43m after £60m was returned to its members.
Boosted by last summer’s hot weather and England’s progress in the World Cup, like-for-like sales in its core food retail business surged 4.4% – its fastest growth in seven years. The division’s underlying operating profit was up 12% to £204m.
The Co-op revealed that it had invested £75m in opening more than 100 new food outlets over period, bringing its total store count to 2,582. It also refitted 138 existing outlets and began the roll-out of its franchise scheme.
The group described its acquisition of Nisa last year as a “game changer” and said the expansion of its wholesaling business was enabling it to significantly grow its footprint, make Co-op products available to more shoppers, and increase the scale of its relationships with suppliers.
Looking ahead, the group warned that 2019 will be “challenging” with Brexit uncertainty and intense competition in food retailing.
However, it said: “We are confident that we can continue to drive the Co-op’s commercial success and increase our social impact in the process.”
Chairman Allan Leighton added: “In these uncertain economic times we have the opportunity to demonstrate that the Co-op Way of doing business has never been more relevant than it is today.
“With the continued support of our colleagues, members and communities, I have no doubt that we will thrive in the years ahead.”
NAM Implications:
- At 1% pre-tax profit margin, not much room for slippage…
- Nonetheless, all elements set up for improvement.
- Therefore proactive NAMs can only gain from closer engagement.
