Co-op has reported a jump in annual profits after making good progress with its new strategy and “right-sizing” of the business. However, it warned of continued external pressures and volatility, with broader geopolitical issues, the introduction of both EPR charges and higher national insurance contributions, and other cost inflation.
Over the year to 4 January 2025, the group’s pre-tax profits rose from £28m to £161m on revenue up 1.5% to £11.3bn (comparative 52-week basis).
The core Food Retail division was the key driver of the Co-op’s performance, with underlying operating profit up 16% to £201m and revenue growing 1.9% to £7.4bn. The group did not release like-for-like figures but stated that it saw strong multichannel sales across its stores and online, ahead of the wider convenience market.
Having invested heavily in the channel in recent years, Co-op’s online food sales jumped 46% to £460m.
The group also noted that it had tripled the number of new own brand products launched and invested £88m in lowering food prices for its members. Last week, Co-op stepped up the price war in the convenience sector by rolling out its version of the Aldi price match pledge.
Meanwhile, the group’s B2B unit saw revenue edge down £100m to £3.5bn. Within this, its Wholesale business slipped from a £14m profit to a loss of £1m on revenues down 5.5% to £1.4bn. Co-op blamed the fall on wider challenging market conditions and its “proactive support for Partners with a significant price investment across hundreds of products”.
Nisa held its market share at 11.9%, against a broader sector decline in volumes, whilst franchise revenue increased 31% to £74m. 20 new Co-op franchises opened during the year, including its first NHS and MoD sites as well as seven new stores with EG On The Move.
At the end of last week, Co-op announced that it was reorganising its supply chain for independent retailers by rebranding Nisa’s wholesale operation as Co-op Wholesale. However, the company stressed that there are no plans to change the Nisa fascia.
Commenting on the results, Shirine Khoury-Haq, Chief Executive of the Co-op, said: “Our solid business performance alongside the progress we have made in right-sizing the business and delivering against our new strategy, is enabling us to create more value for our member-owners every day.
“While broader economic challenges remain, our businesses are delivering strongly against the market, and I’m proud that we continue to provide support to our colleagues, members, and their communities through the continued cost of living challenges they face.”
Looking ahead, the group joined other retailers in flagging the cost pressures it faces from the decisions taken at the Autumn Budget.
“Whilst not immune from these pressures, our focus is on medium to long term profitability and our strong balance sheet enables us to face directly into these external headwinds, compete effectively in challenging markets, and pursue growth,” it said.
Co-op noted that it was on track to grow its membership to 8 million by 2030 and open over 120 new stores across retail and franchise by the end of 2025.
NAM Implications:
- A pre-tax profits rose from £28m to £161m on revenue up 1.5% to £11.3bn…
- …suggests massive cost cutting and reduction of waste.
- The issue has to be whether this degree of improvement can be sustained.
- Nevertheless, suppliers have to assume that Co-op has sharpened up its act.
- And treat the Co-op accordingly.
- Maybe time to review Co-op status and role in your customer strategies?
