The Co-op Group announced its half-yearly results today, which show that pre-tax profit fell to £25m in the 26 weeks to 6 July from £44m in the same period last year.
The retailer says the drop in profit was the result of an unexpected 10% fall in the death rate, which affected its funeral business. The division witnessed a 6% drop in revenue due to conducting fewer funerals and its decision not to increase prices.
Food sales rose 3% to £3.7bn with the retailer recording 22 straight quarters of like-for-like sales growth in the unit. Strong food sales and the retailer’s acquisition of Nisa led to a 12% rise in Group revenue to £5.4bn. Net debt also increased from £714m in January to £784m.
Throughout the six-month period, the Group also returned £29m to members and £6m to 4,000 local causes.
Co-op Health is expected to be rolled out across England by early 2020, in an effort to bring convenience to pharmacy and health services.
The group said its forecasts had taken into the potential impact of Brexit on the business. It warned about increased risk of some disruption to its supply chain and said it would be stockpiling items including water and toilet paper ahead of Brexit.
Chief executive Steve Murrells said: “We’ve enjoyed another good six months where the strength of our business has led to a further £35m of value being generated for our members and their communities.
“Our food business continues to perform strongly in a highly competitive market and has now recorded 22 consecutive quarters of like-for-like sales growth. As our largest business, it is providing the fuel for our growth in terms of member value and community impact.
“In funerals we are actively re-positioning the business to meet the changing needs of our members. We are the market leader but we will also lead the market in providing better choices and options for our customers in the years ahead. Likewise, the development in our insurance, legal and health businesses will enable us to significantly broaden the range of Co-op services, in areas where our members know the Co-op difference can be clearly seen.”
Chair Allan Leighton said: “We have made further progress during the first six months of this year and the strength of our business can be seen by our underlying financial position and through the increasing impact we’re having in local communities.
“The Co-op is now 175 years young, and we have worked hard to ensure that we remain relevant to all generations and in particular younger co-operators. Whether this is using our presence at eight music festivals to introduce people to our values and ways of doing things, or by developing motor insurance products specifically with the needs of young drivers in mind. The Co-op is thriving and we are committed to growing our Co-op difference and impact for generations to come.”