CO-OPERATIVE Group Chief Executive Martin Beaumont has pledged that the disappointing food retailing results will not mean an end to the society's policy of growth through acquistion.
The interim results showed food retailing profits down from over £ 61 million in the first half of 2003 to less than £ 36 million this year ? an outcome Mr Beaumont says is due to the society underestimating the impact of recent acquisitions on the distribution system and managers being overstretched as a result of the massively expanded store portfolio.
"We have grown from having around 600 stores to 1,800 now and it's quite clear the management and distribution systems have been overstretched," said Mr Beaumont.
"However this does not mean that we will be adondoning the strategy of acquiring appropriate chains and stores when the opportunity arises, though the scale of change is likely to be less than over the past two years.
"Obviously, the sort of acquisitions we are on the look-out for only come up once, but my guess is that acquisitions over the next couple of years will amount to a lot less than the 800 or so stores we have bought in the past couple of years."
Mr Beaumont told the News that some of execution involving logistics could have been done better in the past and he pointed out that most of the basic problems are already being tackled.
"There are lots of things we can do to run things more effectively and these are in place now," he said. "We have been addressing some of the basics such as store standards and on-shelf availability and in the longer term we will be updating our warehousing and distribution operations with a particular focus on slow moving lines."
Mr Beaumont agreed there had been a historic under-investment in logisitics within the Group and promised an imminent upgrade in systems infrastructure in advance of the opening of a new purpose-built distribution centre near Coventry next June.
Range of products has also been a concern and the Chief Executive said both the Welcome and Market Town formats were being targeted to ensure they are stocking the products shoppers want.
Three stores have already been modified in a pilot project and are showing "sparkling results," said Mr Beaumont, who added that the trials are set to be rolled out to a further 20 stores shortly.
"It should be remembered that the Welcome and Market Town formats are five years old now. We were out in front five years ago, but of course we have slipped since then.
"It's the first time I have had to preside over a decline in profits and it's very disappointing."