Tough trading conditions affect food sales at East of England

Turnover at the East of England Co-op has increased by £200,000 on last year in the face of tough trading conditions. Total sales were reported as £342.1m, while...

Turnover at the East of England Co-op has increased by £200,000 on last year in the face of tough trading conditions.

Total sales were reported as £342.1m, while pre-tax profits increased by 3% to £6.9m – but underlying trading profit dropped from £5.4m to £4.8m.

A fall in food store sales of 1.3% was one of the main affecting factors. Doug Field, executive officer for finance and technology, blamed this on increased competition.

He said: “We have continued to face a highly challenging marketplace, especially across our food businesses with the change in shopping habits of our consumers and increased competition from the discount stores.”

The society said the underlying trading profit fell by 11.9% through fewer sales and a fall in profits. This was despite a number of efficiencies, including reduced personnel costs. A lack of a Co-operative Group dividend through its bulk buying agreement, which was £1.1m the previous year, also contributed to the fall.

In turning around the food business, the annual report warned of store closures during the year and further impacts on profitability while it seeks improvements.

While measuring its co-operative performance, it found that the percentage of members (as a proportion of sales) trading with the society fell from 47.9% last year to 45.3%, while there was an increase in votes from the members (0.9% to 1.1%). It also announced that it invested £51,534 in co-operatives during the year.

Despite the decrease in food sales, the rest of the business experienced growth. Sales at the distribution centre increased by £1.1m (4.9%), which was largely credited to a deal with Chelmsford Star to handle over 1.3 million cases.

Forecourt sales increased by 5% (£1m), while travel branches saw an extra £2.1m in sales after an increase in stores and travel money services.

The society’s investment property portfolio rose by 2.7% following a number of rent increases. But the overall value of the estate fell by £4.3m to £108.4m, with expenditure of £2.7m being offset by some property sales and the opening of new stores. £400,000 was also wiped off the value of food stores.

The society, which has over 200 trading outlets across Norfolk, Essex and Suffolk, also announced £221.6m in members’ funds and £18.6m cash in the bank.

During the year, sales of Sourced Locally, which extends to over 2,750 products, increased by 22% to £14.6m. The scheme also created around 400 extra jobs in the region.

Mr Field added: “Being a sustainable retailer is never easy especially in an increasingly competitive sector, but we are immensely proud of the success we have achieved with our Sourced Locally partners and we will be looking to expand our range of fresh and locally  sourced produce again this year.

“With change comes tough decisions, but we are committed to ensuring our offering is relevant to the needs of the modern consumer, while playing to our core strengths of being local and independent. Our membership is at the heart of all we do and will become more valuable as we move forward.

“Having a strong balance sheet with no borrowing and focusing on investing in both the business and our colleagues, will, we believe, ensure a sustainable future for the East of England Co-op and ultimately for our members.”

In this article

Join the Conversation