Heart of England Co-op has reported an operating loss of £3.2m for the year to 25 January, down from a loss of £596,000 the previous year.
The society says this was down to exceptional costs of £2.5m, including £0.9m from fixed asset impairment of its non-trading properties at Glenvale.
Gross sales were £103.6m, down slightly from £104.8m. Group turnover overall was £94.7m, down 1.1%.
The society’s new CEO, Steve Browne, wrote in the report that he was “filled with a profound sense of responsibility and optimism”, adding: “The past few years have been marked by significant expansion and growth, enabling us to strengthen our community ties and enhance the services we provide. However, as we navigate through an increasingly challenging economic environment, it is essential for us to recalibrate our strategies to ensure sustainable growth and enhance our resilience.”
This would involve “a period of borrowing” to fund “a pivotal transition” for the society, with an ambitious expansion programme, he said.
Browne added: “We continue to review the policies put in place to create a much stronger, regional co-operative business able to withstand the challenges ahead. We recently entered into a £6m revolving credit facility to supplement a £3.5m overdraft to finance projects we have in the pipeline to grow our business further in the coming years.”
The society’s net worth has decreased by 2.6% to £52.1m over the past 12 months.
The retailer says it continues to labour against economic headwinds, with increasing costs from Living Wage and National Insurance, the cost-of-living crisis hitting consumer confidence, and the impact of retail theft.
“In addition,” said Browne, “we experienced challenging trading conditions partly due to competition particularly from the growth in new locations from the discounters, whilst Tesco and Sainsbury’s have optimised their respective loyalty schemes, at the expense of the convenience sector.”
Other costs include a £2m investment in green initiatives, including solar panels, electric/hybrid vehicles, biodegradable packaging, more efficient refrigeration and smart lighting.
To tackle these challenges, Browne says the society will focus on the strategic drivers in its North Star strategy: enhancing customer proposition and client choice; meaningful membership; operational simplification; new locations and investment; and community, charity and sustainability.
Specific measures include expanding online deliveries with partners such as Uber Eats, Just Eats and Snappy Shopper, the relaunch of its membership programme to reward members at point of sale with larger discounts, and automation to free staff into customer-serving roles.
