The Co-op records fall in first-half sales and profits

The grocer reported a 0.4% fall in total sales to £3.6bn in the first half to July 6. Like-for-likes fell 1.1% in the half.

However, the mutual recorded an improvement quarter on quarter. Like-for-likes fell 2% in the first quarter impacted by a bitterly cold March before improving to a 0.3% drop in the second quarter, buoyed by the beginning of the heat wave.

The Co-op Food reported operating profits of £117.4m, down from £119m last year.

Group pre-tax losses plunged to £559m from a profit of £18m last year, impacted by its struggling banking division in which the group has invested £1.5bn to turn it around. Group sales fell to £5.77bn, down from £5.83bn last year.

Under retail chief executive Steve Murrells, the retailer is looking to revive its fortunes as part of its ‘True North’ strategy to improve availability, value for money, convenience, customer service, product quality and links to the community.

This includes reducing the price of almost 1,000 products, improving its logistics network and refitting stores to its Fresh Format, the second iteration of which is due to be introduced before Christmas.

The Co-op said it expects its food performance to improve in the second half as a result of better stock availability, improvements to the customer offer and with the refit of more than 400 stores.

Co-op group chief executive Euan Sutherland said: “This has been a very difficult first half for The Co-operative Group and the results highlight both the well-documented challenges faced by The Co-operative Bank.

“Having become group chief executive in May, my first few months in the role have been focused on putting in place the recovery plan for the bank, while also starting the important thinking about the changes that need to be made across the group.

“Central to all that work has been the significant strengthening of the management team and we now have in place the right team at both group and bank, with the turnaround experience and drive needed to deliver on our goals and implement the difficult decisions that we are faced with.

He added: “We will recapture the relevance of the Co-operative Group by bringing modern day disciplines and performance management to bear on the mutual model.

“There are no quick fixes here. This will be a challenging four-year turnaround that begins with our comprehensive plan to restore the bank to stability.”