Group announce £307m operating profit

By Dave Bowman

August 26 2010

The Co-operative Group has announced an underlying operating profit of £307 million for the 26 weeks to July 3rd, but although like-for-like food sales in rebranded and refitted stores were up 2.5 per cent on the previous 28-week half-year, the impact of the ongoing Somerfield integration meant that, overall, food sales fell by one per cent.

The Interim Report to be presented to the half-yearly meeting in Manchester in November will inform members that the “unavoidable disruption that comes with large scale integration” had been anticipated and that, despite the problems created by the economic downturn and the massive rebranding exercise which will be completed early next year, the Group’s key food division remains in rude health.

Revenue for the Group’s family of businesses, including financial services, increased by 8.4 per cent, to £6.9 billion compared to £6.4bn in the first half of 2009, but the society said its year on year comparison of profit before tax is distorted by “volatile or one-off costs and credits” and point out that last year’s profit before tax was enhanced by one-off profits from store disposals connected to the Somerfield acquisition and integration costs linked to Somerfield and Britannia.

“As a result, profit before payment to members is £169.2m against £244.5m the previous year,” stated the report. “However after stripping out the volatile one-off impacts, underlying Group operating profit increased by 14 per cent to £307m (£269m) and underlying profit before payments to members is up 17 per cent to £260m, reflecting a strong core trading performance.”

Chief Executive Peter Marks commented: “The Group has delivered another strong performance over the past six months, with continued growth in revenue and underlying profits. Over the last three years, the Group has been transformed.

“We have made further significant progress in the integration of both the Somerfield and Britannia businesses in the first half. This consolidation will continue through the rest of this year, with a strong focus on ensuring that we continue to drive efficiencies and make the most of the opportunities that come from operating across a number of business areas.

“The work already done, combined with the various innovations and initiatives being undertaken in our businesses, will strengthen the Group and enable us to put even more space between us and our competitors.”

Added Mr Marks: “We are reaping considerable benefits from our new found scale — a 7.6 per cent grocery market share — with better buying terms being reflected in keener prices. When we acquired Somerfield we said that, to be successful, the integration needed to be done at pace — one business within two years. That is still our plan and we are on track to deliver it by early next year.”

Mr Marks said that, as expected, 2010 had been a challenging year for the Group’s family of business because of the economic conditions and he declared that little improvement could be expected before the end of next year at the earliest.

Added Mr Marks: “Our focus, as ever, is on our customers and our members; ensuring that we drive our value message through every aspect of our business to their advantage.

“We are confident that our unique approach to business — combining value with values — will enable us to continue to make solid progress.”

Category: Retail Societies