The Co-op Group has grown its underlying operating profit by £34m to £131m for the year to 4 January, but warned it faces more than £200m in headwind costs’ over the year ahead.
Despite the pressures, it hopes to open at least 120 more food stores shops this year and said it would continue to provide support to colleagues and members through the cost of living crisis.
Group revenue held steady at £11.3bn, with membership growth up 22% to 6.2 million, keeping the society on track for its 2030 target of 8 million.
Profit before tax up rose by £133m to £161m, driven by increased operating profits and improved Funeralcare plan investment returns, the Group added.
“Our solid business performance alongside the progress we have made in right sizing the business and delivering against our new strategy, is enabling us to create more value for our member-owners every day,” said CEO Shirine Khoury-Haq.
“While broader economic challenges remain, our businesses are delivering strongly against the market and I’m proud that we continue to provide support to our colleagues, members, and their communities through the continued cost of living challenges they face.
“We look to the future with confidence, supported by a strong balance sheet and a clear and compelling business strategy and remain on track to reach our goal of 8 million Co-op member owners by 2030 with a focus on growing our Co-op for the future.”
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Food revenue rose 1.9% to £7.4bn, “with strong multichannel sales across stores and online”, and market share rose to 13.7%. This 4.9% growth outstripped ahead of the wider convenience market, the Group said.
Online sales rose 46% to £460m, and the Group tripled the number of new own-brand products launched.
Wholesale revenue was down 5.5% at £1.4bn, recording a loss of £1m, down from a £14m profit in 2023, The Group put this down to “continued wider challenging market conditions and our proactive support for Partners with a significant price investment across hundreds of products”.
Franchise revenue rose 31% to £74m, with 20 new franchises opened including the Group’s first NHS and MoD sites as well as seven new stores with EG On The Move.
Federal Retail Trading Services revenue fell 3.1% to £2.08bn.
Funeral service revenue increased 2.8% to £289m (2023: £281m), with pre-tax profit rising to £103m (2023: £13m), resulting from an increase in funeral plan investment returns. There was an underlying operating loss of £1m (2023: £11m loss).
Legal services revenue rose 23.5% to £84m, with an increased underlying operating profit of £27m. There was a significant increase in the number of case openings in estate planning (up 29%). Probate cases were up 2.2%, despite a decrease in death rate of 2.8%.
Insurance revenue fell 3.4% to £28m), with profitability up by £1m to £15m. The business saw decreased sales across motor (down 23%) and home (down 13%), with continued challenges and consumer switching in these markets.
The Group reported a maintained strong balance sheet, with total liquidity of £820m, and net debt (excluding leases) down £27m to £55m – 94% reduction in the last three years.
Other highlights of the year include a £92m investment in member prices across food, insurance and legal, and £96m invested into colleague pay.
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Looking ahead, the Group warned of “continued wider external pressures and volatility, with broader geopolitical issues, introduction of both extended producer responsibility (EPR) charges and higher National Insurance contributions, and cost inflation”.
It added: “While not immune from these pressures, our focus is on medium to long term profitability and our strong balance sheet enables us to face directly into these external headwinds, compete effectively in challenging markets, and pursue growth.”
Khoury-Haq added: “We understand the government has a tough job, but it should look at layering of costs on the industry so it doesn’t tip over the balance and impact high streets.”
