Co-operative Group names Richard Pennycook chief executive on permanent basis

Pennycook, the retailer’s finance director before becoming interim chief executive following the shock exit of Euan Sutherland, has played a pivotal role in restructuring the mutual in the wake of scandals at its banking arm.

Pennycook took charge today, as the retailer reported a slump in first-half operating profit from £105m to £43m but maintained that it is now in a good position to “rebuild and restore the group”.

Pennycook said: “I am delighted to have the chance to lead the Co-operative Group through the crucial job of rebuilding the business.

“We have taken major steps forward over the last six months, securing governance reform and repairing our balance sheet, but we have much to do to return the group to full financial health and improve the performance of our businesses.

“I lead a talented executive team that has started this vital process and together we will continue our work to restore the group to its rightful place at the heart of communities.

“I am confident that the Co-operative Group has a strong and exciting future ahead of it.”

Co-operative Group chair Ursula Lidbetter said: “We have seen the first-class job that Richard has done over the last six months, in challenging circumstances, leading a strong executive team.

“He has a commitment to co-operative values and principles and has built a strong rapport with our members. We are clear that he is the right person to continue the process of rebuilding the group.”

Since being embroiled in difficulties caused by the bank, the Co-op has been undertaking restructuring ranging from modernising its governance model to disposing of businesses such as pharmacies and farms.

It is now concentrating on its Co-operative Food convenience store division alongside its services business, including funeralcare.

The food retail business delivered a 1% rise in like-for-like sales in the six months to July 5, but at the core convenience chain they climbed 4%.

The food division’s operating profit fell from £117m to £107m on total sales flat at £3.6bn.

The profit decline was expected because the retailer is getting rid of bigger stores, investing in lower prices and improved ranges and has spent £74m on its store estate. The Co-operative Food opened 21 new shops in the period and refitted 50.

B y the end of the year the intention is to have opened 100 new stores, completed 300 refits and launched 800 new products.

Pennycook said of the group performance: “These results clearly reflect an organisation in transition and show the scale of work necessary to restore the group to full financial health.

“Underlying profitability has been curtailed by the deliberate actions we are taking to implement our rebuild plan and to face into the tough trading conditions prevailing in the markets in which we operate.

“Looking ahead, we are confident that we are doing the right things to ensure that the performance in all our businesses is what our millions of members and customers expect.

“By focusing on our customers, our members and their communities, we will revitalise the Co-operative Group.”