Co-op blames economy as profits take huge dive
The Co-operative Group has blamed an "unrelenting consumer downturn" for the mutual society's half-year profits tumbling by more 50 per cent.
Peter Marks, chief executive of the Co-op, who steps down in May, said the results, which show a weak performance at its banking and grocery businesses, have to be set in the context of the "dire economy".
He added: "A year ago I warned that we were operating in the worst conditions I have seen in more than 40 years in business. Has it got any better? No, it has got worse."
The Co-op posted a 56 per cent slump to £69m in profits before tax and member payments, the equivalent of the pre-tax figure used by listed companies, for the six months to 30 June. Revenues were flat at £6.56bn.
There is a widely held view that if the Co-op, which operates 4,800 retail trading outlets including funeral care, pharmacy and legal services, had been listed it would probably have been forced to issue a series of profit warnings and make possible management changes over the past two years.
Co-op Bank, which recently sealed the deal to buy 632 branches from Lloyds for up to £750m, swung heavily into the red last year. It turned from pre-tax profits of £9.8m to losses of £58.6m as bad debts soared. The bank blamed "challenging economic conditions" for the rise in bad debt provisions from £46.1m to £91.9m, with particularly bad figures in its corporate loan portfolio. Mr Marks said: "We are a corporate lender to small businesses and the downside of this is that more businesses have got into trouble."
The losses were struck after another £40m charge for mis-selling payment protection insurance, down from £90m last year, and the costs of the long-running negotiations to buy the Lloyds branches of £20m.
The Co-op's food business, which has nearly 3,000 shops, posted a 16.4 per cent fall in its operating profit to £119m. Like-for-like sales dropped 1.2 per cent.
Mr Marks said the grocery market remained highly competitive with up to 40 per cent of products on promotion, adding hard-pressed consumers were "spending less on food" for the first time in his career.
However, the Co-op's specialist businesses, notably pharmacy and funeral care, performed much better and both grew profits strongly.
- 1 Scarlett Johansson new band 'already hit with legal complaint' from another The Singles
- 2 Husband and wife die holding hands within hours of each other after 67 years of marriage
- 3 What color is The Dress, white and gold or blue and black? An eyewitness gives a definitive answer
- 4 The remarkable archaeological underwater discovery that could open up a new chapter in the study of European and British prehistory
- 5 'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Husband and wife die holding hands within hours of each other after 67 years of marriage
Mohammed Emwazi: Nine things we know about Isis militant 'Jihadi John'
What color is The Dress, white and gold or blue and black? An eyewitness gives a definitive answer
'Jihadi John': Mohammed Emwazi – from British computer programmer to Isis executioner
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Oscars 2015: Birdman beats Boyhood as Eddie Redmayne and Patricia Arquette win big - as it happened
New theory could prove how life began and disprove God
Half of Ukip voters say they are prejudiced against people of other races
'Cash for access' scandal: Sir Malcolm Rifkind says 'unrealistic' for MPs to live on £67,000 salary
Aqsa Mahmood branded a 'disgrace' by her parents after claims she recruited three UK girls flying to Middle East
This is what it's like to be dead, according to a guy who died for a bit
iJobs Money & Business
£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...
£250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...
£230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...
£22,000 - £23,000: Beverley James: Are you looking for the opportunity to work...