Central England Co-op has reported a “solid” performance for the year to 22 January 2022 with a trading profit of £19.9m.
The figure is down 29% on last year when lockdown sales lifted profits to £28m, but is up up 13.2% on a two-year basis, says the society in its annual report.
Gross sales from continuing operations (excluding VAT) grew by 0.7% year on year to £875.0m (2021: £869.0m) and were up 3.7% on a two-year basis.
Operating profit of £23.2m was up 9.9% year on year (2021: £21.1m). Cash generation from operating activities stood at £36.8m, down 26.9% year on year but up 10.6% on a two-year basis.
Capital expenditure of £21.5m (2021: £21.2m) saw the society open three new stores, relocate one other and regenerate 41 sites.
The society’s net assets show an improved position of £275.4m compared to last year (2021: £208.1m), largely due to the reduction in the pension scheme deficit over the year.
Food sales were £667.6m (2021: £691.2m) and funeral gross sales were £43.9m (2021: £40.7m).
The funeral division also took in 248 new colleagues, 50 new funeral homes and two vehicle logistics centres following the transfer of the funeral business belonging to Midcounties Co-op.
Related: Central England opens its first store in Lancashire
£963,000 was shared with colleagues from the annual profit; other rewards included an extra day paid leave to celebrate the society winning Leading Co-op of the Year in the Co-operatives UK Co-op of the Year Awards. Colleagues took part in over 45,000 learning hours, gaining 514 professional qualifications.
During 2021, Central England awarded £170,000 in Community Dividend Fund grants to 136 local groups and good causes.
Innovations during the year include an increase in home delivery which is now available from 70% of the society’s store estate, and improved systems to eliminate food waste with the adoption of the Dynamic Markdown to maximise sales.
Tech has also driven efficiencies at the society’s Business Support Centre in Lichfield, to eliminate repetitive tasks. There are now plans to digitally orchestrate supplier management processes with the implementation of “market-leading systems capability”.
Related: Scotmid Co-op announces £5.7m trading profit for 2021
Writing to members in the report, CEO Debbie Robinson said it had been another year of significant change, with the relaxation of lockdown measures.
“As restrictions eased, we saw a more challenging second half of the financial year,” she said. “We responded to this challenge by improving our local product offerings and increasing the number of concession partners such as Nutmeg clothing and the Original Factory Shop.
“Our brilliant distribution team responded amazingly in the face of driver shortages, and we even rolled out a new project, Warehouse to Wheels, which has, so far, seen 20 new drivers who were previously employed in our distribution centre take to the roads. We continue to innovate and invest in new stores and regenerations, alongside introducing new technology including the Scan, Pay, Go app, Click & Collect, and rapid delivery services.”
“For many,” she added, “life will return to normal, for others, especially the most vulnerable, life may never be the same again. As co-operators, we must find new ways to support the communities we serve and ensure our goods and services are accessible to all.”
Looking ahead, she said there are more challenges for the convenience sector, “including new rules governing the way we market items to customers that are high in fat, sugar and salt … This is a real opportunity to encourage and support customers to eat better.
“The sector will face increases in corporation tax from 2023, and disruption to supply chains continue due to the impact of Brexit. Inflation has reached a 30-year high, which will impact on our cost base and households will face considerable increases in the cost of living. Therefore we expect to see a significant threat to both household spending and business profitability.”
There are also challenges from the growth of online retail and new tech start-ups, alongside the growing threat of cyber attacks, and Ms Robinson said Central England is working to build its resilience in this area.
The conflict in Ukraine is another factor for the industry to consider in 2022. “We responded swiftly and were the first retailer to remove Russian vodka from all our shelves,” wrote Ms Robinson. “We also quickly supported the fundraising efforts of the Disasters Emergency Committee Ukraine Humanitarian appeal.”
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