Channel Islands Co-op has posted its results for the year to 9 January, with supply problems in the second half knocking trading profits by 16.7% to £6m (2020/21: £7.2m).
Turnover fell to £181.6m (2020/21: £185m), with food and fuel sales of £169.7m affected by falling trade at its petrol stations as home working continued.
The society wrote down the value of its Leale’s Yard site in Guernsey in preparation for a redevelopment, which together with the supply chain costs generated a £6.7m loss.
“Availability shortages and increased costs from our main UK supplier cost £4.4m in lost sales and additional costs,” said CEO Mark Cox. He said this was a one-off item, along with the write down of Leale’s Yard ahead of an ambitious redevelopment plan, and their combined impact had created the loss.
Mr Cox bemoaned a “disappointing but not unsurprising performance when considered against the head winds of significant availability challenges in the second half of the year and increased costs from our main UK supplier … We sought to limit cost increases to customers and members whenever possible.
“Driver shortages in the UK and significant ongoing Covid-19 absences throughout our UK supply chain combined to leave shelves looking empty at times.”
The food business is continuing to seek new products and suppliers to offer more choice build greater resilience into the supply chain, added Mr Cox. Last year the society added Dunkin’ Donuts, and in Jersey it added Costa Coffee machines and, to selected stores, the French Carrefour food range. These will be rolled out to Guernsey stores this year and the society is continuing to expand its home delivery service.
Road fuel sales have also fallen, as people continue to work from home and Mr Cox said they are unlikely to return to pre-pandemic levels in the short term.
The society’s chain of seven pharmacies had performed well, he added, with sales of £10.3m, and there was also a positive performance from its funeral businesses, De Gruchy’s in Jersey and Argents in Guernsey, providing 398 services in the year with a turnover of £1.8m consistent with 2021.
Almost £50,000 was donated from the society’s new Community Fund to local projects, shared out among 173 charities.
The year also saw the society stop providing Bureau de Change services through our member services counters in Jersey. Bureau de Change in Guernsey will stop in April 2022. “The increasing use of digital alternatives to cash combined with the cost associated with continuing this service were key factors that influenced our decision,” said Mr Cox.
After writing down the value of its Leale’s Yard site, the society last month submitted a planning application for over £50m of capital investment providing 320 homes, a retail store, car park, green and civic space to be available within five years, which Mr Cox called “an exciting development for the society”.
This year, the co-op is also opening of a new store at Five Oaks, Jersey, rolling out new branding and new uniforms across its estate and introducing a new loyalty proposition for members.
Further investment is being made in technology, including new generation electronic shelf edge labelling, new tills in stores, and additional functionality on the online shop.
The year will also see the society publish its first formal sustainability strategy “which will lay the groundwork for us to measure, report and set targets in each area over the coming decades”.
The co-op continues to have a strong balance sheet, he added, with member’s funds of £177.6m. Membership grew by 1,048 to 129,249, and the cash balance is £45.2m.
The society is also revising its approach to its annual evaluation of governance, with the new approach will be introduced in 2022. The board is proposing a reduction in the maximum term for directors from 12 years to nine.