Midcounties Co-op has reported an overall loss of £5.1m for the first half of the year (2023/24: £4.7m loss), as the impact continues from increased borrowing levels and interest costs.
The figure comes despite the society recording an operating profit of £5.6m for the six months, up £1.9m (52%) on the first half of 2023. It also delivered gross sales of £782.0m – an increase of 1.1% over the same period last year, while gross profit rose 7.2% to £118.5m.
Group CEO Phil Ponsonby, writing in the society’s report, said: “While it is pleasing that we have grown revenues and operating profits and are continuing to invest, the society has made an overall loss of £5.1m for the first half … This reflects our increased borrowing levels and interest costs, and also includes
accounting losses recorded against the sale of non-strategic properties, amounting to £1.5m.
“These sales generated net cash proceeds of £6.6m which have been reinvested and, together with other investments and efficiency measures, will deliver improved profitability.”
The outlook remains challenging, warned Ponsonby, with the cost of living crisis continuing to affect food retail. But like-for-like sales increased despite poor weather in key spring and summer months, he added.
Other retail efforts included the co-op’s continued involvement in the movement-wide campaign for tougher laws on store crime, with over 13,000 members joining the call for an amendment to the Criminal Justice Bill, making it a specific offence to assault a shopworker.
“We also continued to look at ways of working collaboratively with police forces and other retailers,” said Ponsonby, “and have supported police and crime commissioner campaigns such as Offender to Rehab in the West Midlands.”
The food business also saw the final rollout of electronic shelf edge labels across all stores, following a multi-million pound investment which “will help drive significant efficiencies and time savings for our store teams, reduce the costs of printing and paper usage, and drive an improved customer experience”.
The society’s travel business “has continued to develop well”, said Ponsonby, with revenue and passenger levels ahead of pre-pandemic 2019 on a like-for-like basis.
“However, cancellations have remained volatile, driven by tour operator operational activity, global events and consumer cost of living challenges.”
He added: “The focus on our own tour operator, Co-op Holidays, continues and we have now launched a sustainable holiday partnership with Byway, a flight-free travel platform, which offers rail packages ranging from short domestic breaks to destinations in Africa.
“We have increased the number of destinations available through Co-op Holidays to 299 and gross sales are up by 44.2% on the previous year,” said Ponsonby. “We have been investing in new technologies and have completed the first phase of the project to replace the core travel system and introduce the new bookable tour operator platform.”
Midcounties’ nursery childcare arm has continued to see a fall in the average session times per booking, the report said, as the cost of living crisis forces families to economise. This has been been partly offset by additional demand as reforms give more families access to childcare funding.
The nursery sector is struggling with labour shortages, which have led to wage increases, adding to to operational and financial pressures on the business. But Midcounties has increased its investment in childcare, said Ponsonby, “with a focus on improving safeguarding, quality and the state of repair across our estate”.
Meanwhile, the society has completed a strategic review of its telecoms business and says it will invest money to sharpen pricing across its broadband and mobile offering during the second half of the year.
“It is pleasing to see our relationship with Octopus Energy continue to develop,” said Ponsonby, “and, in addition to maintaining our core Co-op Energy customers, we are now seeing growth in new customers.”
In line with principle 6, co-operation among co-ops, Midcounties has also increased its number of community energy power purchase agreements to more than 255 community energy groups, he added. the society is also working with Big Solar co-op to fit solar pV to its sites.
Other co-operative activities have seen the society working with its Member Engagement Committee, said Ponsonby, including foodbank awareness days and its Fairer Living Festival and AGM in Walsall, which attracted over 800 people.
Later this year the society plans to launch an updated version of the member app – which has more than 139,000 users – including improved functionality and sections on community and sustainability.
“Throughout Co-op Fortnight we focused on showcasing co-operation amongst co-operatives and our broader activity to help grow the co-op economy,” said Ponsonbuy. “During Co-op Fortnight we launched our 50 New Co-ops report, providing an update on progress against our pledge to support the creation of 50 new co-operatives, including case studies on new co-ops we have supported and the partner organisations we are working with to achieve this, such as Co-op Futures and the Plunkett Foundation.
“Since launching our pledge in 2022, we have helped create 13 new co-ops and community businesses.”
In April, Midcounties celebrated the first anniversary of its Fairer Futures Programme, which provides work experience and training opportunities at its Walsall town centre food store for those facing barriers to employment, in partnership with local supplier Miss Macaroon.
In its first year, the programme has supported 37 young people, with 23 gaining employment as a result, says the report.
Rounding up the report, Ponsonby warned: “As we look toward the second half of the year, while it is encouraging to see inflation levels beginning to stabilise, the overall outlook and potential impact on consumers remains uncertain.
“Further increases in energy costs coupled with the potentially difficult fiscal policies trailed by the new government ahead of the October budget, are likely to mean that trading conditions will remain volatile.
“We will continue to work with your board to ensure the right decisions are made in the best interests of our members and communities for the longer term.”
