The Co-op Group has returned to profit in the first half of the year as growth in membership and its quick commerce business offset cost inflation and losses from shoplifting.
The retailer recorded an underlying pre-tax profit of £3m for the six months, a turnaround from a £9m loss in the first half of 2023. Underlying operating profit rose £4m to £47m (H1 2023: £43m),
Group revenue rose 1.5% to £5.6 bn, defying “challenging external headwinds and contraction in the wider food retail convenience market,” said the Group.
The report also hailed “notable sales increases“, with food up by 3.2% and legal services up by 35%, while membership and quick-commerce growth offset market and operating cost inflation headwinds.
Quick commerce sales grew 62%, reaching £217m (£134m); by the end of the six months, the Group was the largest grocery provider on Deliveroo, Just Eat and Uber.
The Group added that it maintains a strong balance sheet continues, with further reduction in net debt to £42m – a decrease of £55m on the same period last year.
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“We have delivered a strong performance for the first six months of this year as our strategy starts to gain real momentum,” said CEO Shirine Khoury-Haq. “Although the external environment remains challenging, it is testament to the underlying strength of our Co-op that we have outperformed in all our markets while significantly increasing our investments in our colleagues, pricing and in the growth of our businesses.
“While there is much more for us to achieve, we are on track to reach our goal of 8 million Co-op member owners by 2030. This confidence is supported by a strong balance sheet, a clear business strategy, a compelling vision, and 55,000 amazing Co-op colleagues who are central to our achievements over the last six months.”
The Group added that it grew its active membership base by 20% reaching 5.5 million-member owners, with a 79% increase in new members joining aged 25 and under. Its naming rights sponsorship over Manchester’s new Co-op Live arena directly resulted in 54,000 new member-owners joining over the period, it said.
Investment included more than £26m investment in expanding its reach, and £55m in food prices, and £48m into colleague pay. Store colleagues to at least £12 an hour, says the Group, aligning with Real Living Wage, up 10.1% on last year, and representing a 21% increase since March 2022.
The Group hit headlines with its leading role in the campaign against retail crime, with lawmakers pledging tougher action on theft and attacks on store workers. The campaign continues as the Group reportts that theft and fraud costs rose 19% over the half to £39.5m.
Matt Hood, the managing director of food, said: “It isn’t going away. The reality is that every day four of our colleagues are attacked, up 34% on 2022, and scarily, a further 115 of my colleagues will be seriously abused, up 37% on two years ago.”
Hood said while the businesses investments were working to make colleagues safer, he believed there would not be an immediate drop in thefts this year.
“I would love to sit here and say yes [there would be a drop in the second half of the year] … that all the money we are investing will pay off,” he said. “But I think it is going to be slightly longer term than that, and that has to be in conjunction with any changes the government makes to the law.”
Additional measures taken by the Group on crime over the period include the introduction of AI tech operated by security firm Mittie at 14 stores which can detect if someone has left without paying for an item, or whether someone has entered with a concealed weapon, and participation in the Project Pegasus database, which shares CCTV images with police and other retailers to run through facial recognition technology.
