Midcounties Co-op announces operating profit of £14m for 2020

The society saw surging lockdown food sales but the pandemic hit its travel and childcare arms

Midcounties Co-op has announced an operating profit of £14m for the year in its annual results to 23 January.

The annual report for the society saw a gross sales drop of £406m, one third lower than last year, with the operating surplus after the cost of share of profits payments at £12.7m.

The society saw an increase in volumes and profitability in its food retail and funeral businesses. The performance of the society’s food retail business saw gross sales increase by 11% as more customers chose to shop locally during the pandemic.

The society says the operating profit “underline that as a diverse and robust business Midcounties is well-placed for future growth”.

In the pandemic years the co-op faced significant challenges across some of its other trading groups. Lockdown restrictions meant its travel business was brought to an abrupt halt, resulting in a 91% fall in gross sales, while occupancy at its Childcare nurseries was far lower than previous years, resulting in gross sales down 22% for the year.

Midcounties said it responded to the pandemic in line with its values-led co-op model, and took steps to support colleagues, members and communities.

The society reports spending almost £5m on personal protective equipment and topping up pay for colleagues who were furloughed, as well as launching from scratch a home delivery service for the most vulnerable people.

Working in partnership with more than 1,000 volunteers, the service has now made more than 100,000 deliveries and the service will continue to support vulnerable people until at least June. The society has also continued to support those impacted by the economic effects of the pandemic with more than £50,000 in donations to local food banks; and it provided £78,000 to a Community Restart Fund to help those helping others.

The society increased its partnerships with local suppliers during the pandemic, adding 33 new suppliers in its food business, many of whom had been hit by the virtual closure of the hospitality industry. These products are a core part of the Best of our Counties range which continues to grow in popularity, passing £16m in sales in 2020.

Looking to the impact of Covid-19 on its substantial travel and childcare businesses, Midcounties says all 78 of its travel branches were closed for large proportions of the year. A virtual customer contact centre was set up so that colleagues could keep in contact with more than 75,000 affected customers, and working to refund more than £100m as travel plans were cancelled.

Childcare saw reduced occupancy rates as a result of the lockdowns, but continued to prioritise supporting its families. The society says it kept open as many of its 45 nurseries as possible to help key workers and paused fees for the majority of parents for much of the year, reflecting the fact that they were unable to send their children to its nurseries.

It also established a fund that raised £40,000 to cover childcare costs for key workers and provided free childcare for those who had been impacted by redundancy.

The society adds that it continued to open stores in the last year despite the pandemic, although this was at a slower rate than originally planned. It intends to increase this investment significantly this year, with three new food retail stores already opened and a further three expected in the next two months, at an expected investment value of almost £3m.

Group CEO Phil Ponsonby said: “As an ethical and values-driven society we always seek to strike the right balance between delivering profits for our members and fulfilling our purpose of creating a better, fairer world and enhancing the lives of our colleagues, members, customers and the communities we serve.

“This has never been more important than during the last 12 months. Both the board and I are extremely proud of how all our 8,000 colleagues stepped up to the challenges of the pandemic and helped thousands of members and customers in so many ways, and we are indebted to them for their enormous contribution.

“They helped our society to deliver a positive financial performance despite the difficulties many of our businesses faced.

“While the pandemic has undoubtedly had a significant impact, with our travel and childcare businesses especially affected, it has also underlined the strength of our diverse and robust trading groups and we remain committed to investing for the future.”

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