The Co-op Group has released a strong set of interim results for the six months to 7 July, with pre-tax profits rising from £14m to £26m compared with the same period last year.
Revenues rose 10% from £4.5bn to £5bn, underlying profit before tax was up from £3m to £10m, and net debt fell from £775m to £707m.
The Group said a strong sales performance and the purchase of Nisa had driven the strong figures. Food like-for-like sales were up 4.4% and the Group, which noted positive trading factors such as the World Cup and the summer heatwave, has now enjoyed 18 consecutive quarters of like-for-like sales growth.
Chief executive Steve Murrells also confirmed the purchase of prescriptions app Dimec, marking the business’s return to the healthcare sector.
He said it would allow the Group “to accelerate the development of our healthcare proposition, and provides the digital platform required to help customers in the future conveniently access and link their healthcare needs, including interacting with their NHS GP”.
This emphasis on health and wellness ties in to the Group’s Food business, with healthy-eating and free-from ranges. Mr Murrells told a press conference call he hoped this would “nudge” people to healthier lifestyles and reduce future pressure on the NHS.
The Group said it had also delivered £35m of member value through the “5+1” membership scheme, with further member value created in home insurance through the “won’t be beaten on price guarantee” on renewals, and additional price reductions for members on funerals.
It added: “Our Co-op presence is strengthened through the acquisition of Nisa and the Co-op now supplies food to over 7,700 stores. By the end of 2018 we will supply 850 Co-op own-brand product lines to our Nisa partners.
“Co-op continues to lead the way in the Funeral sector via numerous measures to tackle funeral affordability, culminating with this week’s announcement which guarantees not to be beaten on price for all funerals.
‘Stronger Co-op, Stronger Communities’
“Our Co-op social impact also increases with over 12,000 local community projects having now benefited from our member reward scheme and over a dozen business partners having joined our Bright Future programme to tackle modern slavery.”
Mr Murrells said: “We’re moving forward at pace with our Stronger Co-op, Stronger Communities plan, which we set out at the beginning of the year. We know that in order to make a difference, we have to be commercially successful and our performance in the first half shows that we’re delivering on that ambition. Our investment in products, price and distribution channels has seen us grow revenue, profit and member value in the first six months.
“We are also back to responding quickly and decisively to the issues which affect our members and customers. Funeral affordability is clearly an issue affecting many and our guarantee not to be beaten on price re-affirms our commitment, as market-leader, to also lead the market.”
Group chair Allan Leighton said: “Against a backdrop of increasing national uncertainty, I’m pleased that the Co-op has continued to perform successfully during the first half of the year. It is in these times of volatility that our way of doing business, which gives back to our members and the communities we operate in, becomes even more important. These results show that we are growing our business and increasing the positive impact we can have on our members and the causes they care about in their communities.
“We’ve got exciting plans to continue transforming our Co-op to make it even more competitive, relevant and innovative in both existing and new markets. We’ll continue to grow our current businesses and through our Ventures team we’ll move into new areas where we can deliver even more value for our members and their communities.”
A call for certainty over Brexit
Asked about the Group’s contingency plans for a no-deal Brexit, Mr Murrells said the Group was liaising with HMRC on becoming an authorised economic operator – which would allow fast-tracking through customs under international agreement and “give us a bit more comfort were issues to arise at border control”.
He said the Group was “in good shape” to meet the challenges of Brexit but “we want certainty and no surprises”, adding that he wanted assurances on migrant labour to protect colleagues working at the Group.
Jo Whitfield, chief executive of the Food business, said the Group’s commitment to British suppliers offered it some protection, but called for “certainty” from the government on its supply chains to the UK.
“It’s tough because people are working in very uncertain conditions,” she said, adding that there was still not enough information to draw up contingency plans. “Clearly we’re all working on assumptions and scenarios where we aren’t clear what will emerge”.
Asked if there plans to store food, Mr Murrells said the Group had the capacity to stockpile longer shelf-life products but warned that the real area of need would be on fresh produce, affecting its imports of fruit and other short-life products.
“Even if we were to quadruple our chilled storage at docks for fresh food, it would not be enough,” he said.
“We are nimble and agile enough to do the right thing to protect availability, but we are keen that the government hears our concerns.”