Co-op boss Richard Pennycook insists it has 'turned the corner'

The group made a net profit of £216m in the year ending January 3, 2015 after posting a £2.3bn loss the previous year.

“Robust” performance from Co-operative Food led the recovery, as underlying profits increased 1.5% to £251m during the 52-week period. Overall like-for-likes were up 0.4% and up 3.2% in its ‘core convenience’ stores. The group’s underlying profit was £172m.

The Co-op’s food arm offset losses in its insurance business.

Pennycook said: “2014 was an important year, one where we turned the corner for the Co-operative Group. We stabilised the organisation and that’s allowed us to shift our focus this year to rebuilding the Co-operative for the longer term.

“There’s still a great deal to do, but I hope today’s results demonstrate real progress.”

Rebuild plan

Pennycook was pleased with the progress the Co-op made during the “rescue” phase of the three-point plan to transform the retailer. It will now begin the “rebuild plan”, which will include opening 100 new convenience stores by the end of 2015.

It opened 82 c-stores during 2014 and refurbished more than 700. Pennycook added they had seen “a good response to that investment” with a “single-digit uplift” in sales at its refitted shops.

Co-op bosses also aim to sell more of its larger food stores, of which it still owns 717, but would not be drawn on exactly how many they are seeking to offload this year as part of a “steady process”. Pennycook said they would hope to sell an average of 50-75 per year “if the market is right.”

Pennycook admitted that the group only made a profit in 2014 after selling off other assets in the form of its pharmacy and farms businesses, but insisted that was “not bad progress” in the first phase of its three-year turnaround plan.

He said: “We’ve worked hard to reduce our costs, which were too high.

“While we did move back into profit in 2014, that was largely driven by the one-off proceeds and gains from the pharmacy and farms deals, and also some property disposals. Without those, we would have best have been at break even.

“So we’ve moved from a £2.5bn loss to about break-even – not bad progress at this stage of our recovery.”