Midcounties operating profit rises to £7.2m as gross sales revive past £1bn mark

The co-op’s performance was buoyed by a post-pandemic revival of its travel arm and reduced performance obligations from its former energy business

Midcounties Co-op has announced a sharp recovery in operating profit for the 53 weeks to 28 January, rising to £7.2m (2022: £2.4m).

Gross sales hit £1.3bn, up from £908m the previous year, and net debt continues to fall, to £36.7m (2022: £40.5m). Total revenue was up 20% on last year at £802.9m. Gross profit increased by 10% to £214.1m.

In the society’s annual report, CEO Phil Ponsonby wrote: “Gross sales have returned to above the £1bn mark for the first time since the coronavirus pandemic, coming in at £1.34bn for the year. This is a 48% increase on last year’s £907.6m. The uplift is mainly due to our Travel business recovering after the pandemic but was also supported by growth in our Food and Childcare businesses.

“Operating profit increased significantly from £2.4m to £7.2m reflecting an underlying profitable performance and additional profits from significant, one-off items as a result of reduced performance obligations associated with our former energy business.”

The society’s net asset position has improved by £8.6m, he added, largely reflecting a much improved position on the pension deficit.

“Our results represent a resilient performance for your society,” added Ponsonby, “given the very significant world events and macro-economic challenges we faced. This is testament to the hard work and commitment of our brilliant colleagues who continue to support our members, customers and their communities while cementing and promoting our values in everything they do.

“The financial year has been impacted by high inflation and a sharp increase in energy prices. We have tried to find the right balance between supporting members by providing meaningful discounts and offers while covering our increasing bills and wholesale costs.”

Investments include installation of LED lighting and improved refrigeration, helping to cut energy use by 8.8%, “saving the equivalent of 870 tonnes of CO₂ and £1.2m in energy costs” and bagging Midcounties the Energy Project of the Year award at the edie Sustainability Leaders Awards.

The society spent £4.2m on eight new food stores and a new childcare site in Warwick, said Ponsonby, “but we also had to make some difficult decisions about our Healthcare division.

Phil Ponsonby, group chief executive of Midcounties

“In the second half of 2022, we completed a full strategic review of the business, choosing to step away from the sector. The business had been operating at a loss for some considerable time, and the board felt that the investment and resources required to grow it to a viable and competitive scale would be better focused on our core businesses and would benefit members more appropriately if channelled into these other areas of the society.”

Member trade now stands at 27.2% of all transactions compared with 24.6% last year, and 83% of members who shopped with the society used a member offer saving a combined £1.4m. The society attracted 86,000 new members, 14,000 of whom are under 30.

Social initiatives from the co-op include a £20,000 donation to its foodbank partners at the end of the year to fund their post-Christmas peak, and work with the co-operative community to support the DEC appeals for
the earthquakes that hit Turkey and Syria, the floods in Pakistan, and the war in Ukraine.

It says its link-up with the Too Good to Go app has saved 64,000 meals from going to landfill. In the energy field, its Younity joint venture with Octopus launched a £1.5m Kickstarter Accelerator Fund to provide start-up loans for community energy projects, starting with a rooftop solar venture from Bristol Energy Co-op.