Midcounties Co-op has announced operating profits before significant items of £7.4m and a 14.6% increase in gross sales in its annual report for the financial year ending 22 January 2022.
Gross sales were £912.9m (2020/21: £796.9); revenue was £676.5m (2020/21: £693.2m) and EBITDA was £26.6m (2020/21: £31.2m). The society has reduced its net debt to £40.5m (2020/21: £64.9m).
The co-op – whose businesses include food retail, travel, childcare and utilities – says all its trading groups continued to face significant challenges due to the pandemic and the resulting impacts on consumer behaviour, working patterns and labour shortages.
This was most keenly felt in the travel business, says Midcounties, with restrictions on overseas travel affecting performance in comparison to pre-pandemic levels – although gross sales rose £165m on the previous year. Colleagues in the travel business were recognised for their customer service with three awards at the Travel Weekly Agent Achievement Awards. The business also partnered with Go Beyond, a charity offering breaks of a lifetime to children and young people facing serious challenges, and donated £25,000, enabling hundreds of young people to enjoy either a week-long residential holiday or a day trip.
In line with reports from other consumer co-ops and the wider grocery industry, Midcounties’ food retail business saw a reduction in shopping trips to smaller stores, which make up the bulk of its estate.
“In addition,” it added, “sector-wide labour shortages resulted in difficulties around the supply of products during key trading periods to the society’s stores through the national distribution network operated by the Co-operative Group. As a result, food retail saw a 6% decline in gross sales from the previous year, although this represents a 4.5% increase on 2019’s pre-pandemic figures.”
The society made some major changes to its business during the year, transforming its healthcare business to an online service by completing its programme to dispose of all community pharmacies. It also transferred the majority of its funeral business to Central England Co-operative and a small number to other providers within the co-op movement. It says this was “a strategic exit of the sector that ensured customers can continue to be served by a co-operative funeralcare provider”.
It added: “These decisions formed part of a prudent and balanced approach to the society’s finances that saw debt levels reduce by more than 37% over the course of the year.”
Investments saw Midcounties open seven new food retail stores in 2021 and complete 46 store developments, with 10 new stores planned for 2022 at a total investment of more than £5m. The society also opened two new childcare sites, with a further site planned for 2022, as part of its plans to double the size of its nursery estate over the next five years.
A new members app was launched which has been downloaded by almost 60,000 members.
Despite the challenging business environment, the society says it continued to support the vulnerable people in its communities through its home delivery service in partnership with local volunteers and community groups, which has now made over 150,000 deliveries.
Other community support initiatives during the year saw Midcounties provide 50,000 healthy meals to vulnerable families during school holidays, cutting food waste by selling food nearing its best before date through the Too Good To Go app, and sharing space in stores with local community groups.
In total, Midcounties colleagues volunteered over 25,000 hours in their communities last year, which the society says helped it gain recognition by Business in the Community, which rated it highest out of 20 similar businesses in its Responsibility Tracker.
In terms of sustainability, the utilities business launched a climate positive broadband tariff and launched Younity, the joint venture with Octopus Energy to support community energy suppliers. At the year end Your Co-op Energy had 186 community energy partners, more than double the number from the same time last year, providing enough community energy to power more than 70,000 homes.
Group CEO Phil Ponsonby said: “I am extremely proud of the way colleagues from across our operations have dealt with the challenges we have faced throughout the last year and dedicated themselves to supporting our members, customers, communities and each other.
“The experience of the last year has underscored the strength of our diverse business and our prudent and balanced approach has allowed us to continue to invest in growing our society to deliver for our members and support the communities where we operate.
“As we start the new financial year, the world faces even greater challenges and the economic and humanitarian shockwaves from the horrific situation in Ukraine serve to reaffirm how important it is that we continue to keep true to our values and do all that we can in building a fairer future together.”