Co-op mulls sell-offs as profits slide

Fringe assets may be ditched to focus on banking and groceries amid 'worst conditions in 40 years'

The Co-operative Group is considering plans to jettison some of its smaller businesses in the latest shake-up of the mutually owned business, which will post a sharp fall in annual profits this week.

Peter Marks, the chief executive, wants to focus its strategy on the Co-op's grocery and banking divisions, and may consider offloading fringe assets, such as its own-label workwear, electricals business or car dealership unit.

The move comes as fears grow over the group's bid to acquire 632 branches from Lloyds Banking Group, after the process fell behind schedule. While the Co-op still has preferred bidder status, Lloyds last week admitted it would not agree terms on the complex transaction before the end of March.

This is the latest headache for the group, which has unveiled hundreds of redundancies already this year, as it seeks to deliver cost savings and efficiencies across its businesses from retail pharmacy and funeral care to legal services.

On Thursday, Mr Marks is expected to have to defend lower pre-tax profits than the record £414.4m delivered in the year to 1 January 2011.

While its banking division is thought to have performed robustly, the Co-op's 3,000-store grocery operation has had a year to forget. Its food business suffered a 21 per cent fall in operating profit to £135.4m in its first half to 2 July, hit by what Mr Marks described as the worst trading conditions in his more than 40 years at the organisation.

The Co-op, which acquired the Somerfield chain for £1.6bn in March 2009, posted a 3.6 per cent fall in like-for-like food sales over the first half. Since then, its grocery performance has improved, but its underlying sales remained in negative territory in its fourth quarter.

Its banking division remains in negotiations with Lloyds and the Financial Services Authority over problems such as the potential hurdles of capital constraints and any possible disruption to customers.

NBNK, a rival for the 632 Lloyds branches, is reportedly ready to step in if the Co-op's bid falters. Lloyds has promised to update the market in its second quarter and could still pursue a flotation of the branch business.

The Co-op's banking division made 187 staff redundant this month , in addition to the 300 job cuts made in its food business in February. The group declined to comment.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Neil Pavier: Management Accountant

£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

Sheridan Maine: Commercial Accountant

£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

Laura Norton: Project Accountant

£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

Day In a Page

Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine
Letterman's final Late Show: Laughter, but no tears, as David takes his bow after 33 years

Laughter, but no tears, as Letterman takes his bow after 33 years

Veteran talkshow host steps down to plaudits from four presidents
Ivor Novello Awards 2015: Hozier wins with anti-Catholic song 'Take Me To Church' as John Whittingdale leads praise for Black Sabbath

Hozier's 'blasphemous' song takes Novello award

Singer joins Ed Sheeran and Clean Bandit in celebration of the best in British and Irish music
Tequila gold rush: The spirit has gone from a cheap shot to a multi-billion pound product

Join the tequila gold rush

The spirit has gone from a cheap shot to a multi-billion pound product
12 best statement wallpapers

12 best statement wallpapers

Make an impact and transform a room with a conversation-starting pattern
Paul Scholes column: Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?

Paul Scholes column

Does David De Gea really want to leave Manchester United to fight it out for the No 1 spot at Real Madrid?