Co-op recovery will take five years, says new chief executive

Richard Pennycook laid out a five-year plan for the mutual, likening the Co-op to a sick hospital patient

Reviving the beleaguered Co-operative Group after two years of turmoil could take as long as five years, the new head of the business warned today.

The Co-op — whose former boss Euan Sutherland branded the business “ungovernable” — has called on Richard Pennycook as its new, permanent chief executive, less than five months after it gave up control of its controversial bank which had a £1.5 billion black hole.

The wider group narrowed pre-tax losses to  £9 million in the half-year to 5 July, vastly improving on last year’s £2.5 billion loss.

Pennycook — the interim boss who previously said he had no intention of taking on the job full-time — laid out a five-year plan for the mutual, likening the Co-op to a sick hospital patient.

He said: “We’re out of the operating theatre and in the recovery room. In time we’ll be on our feet again.”

But he also warned that the mutual is braced for a three-year “rebuild” phase and further two-year “renewal” phase following a year of scandals and fallouts which saw its bank chairman, Paul Flowers, plead guilty to possession of cocaine, crystal meth and ketamine.

Debts hit an incredible £1.4 billion last year but a series of disposals, including its pharmacy, farming and security businesses in recent months, will cut back the debt pile significantly this year.

“Co-op is a reshaped business and the businesses we have are all really well-suited to the type of organisation we are,” Pennycook said.

“This is now primarily a convenience retail business and that will be a foundation for our future.”

Last weekend the mutual voted through plans by former City minister Lord Myners to create a new board of governors with outside experience to improve corporate governance.

But analysts have questioned whether senior business leaders would be willing to put themselves forward.

Chairwoman Ursula Lidbetter admitted she has yet to be approached by anyone looking to fill the new board, but said the pay would be within the “median” range for non-executives.

She added: “We will be a median payer but we clearly realise that excessive pay is a major issue for our members.”

Co-op’s food business managed underlying profits of £107 million for the period, down 8.5 per cent compared with a year ago, while profits at its other major business, funerals, also fell 17 per cent to £35 million.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
News
ebooksNow available in paperback
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

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Ashdown Group: Marketing Services Manager - (communications, testing, DM)

£32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...

Guru Careers: Finance Account Manager

£Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas