Co-op sells 150 years of history with plans to ditch farms and jobs
The Co-operative is set to abandon key parts of its business as the reverberations from its banking scandal continue to shake the operation.
The society is planning to sell its farming interests and will also listen to offers for its profitable chain of pharmacies. Peter Hunt, the former general secretary of the Co-op political party, described the moves as "pretty shocking."
It comes ahead of its reporting what could be a £2bn loss, which would represent the worst deficit in its more than 150-year history.
The losses largely stem from the beleaguered Co-operative Bank, which has fallen into the control of private investors after a £1.5bn hole in its balance sheet was identified. But non-cash writedowns of other parts of the business are also set to contribute to the total, including its retail assets.
Job cuts are all but inevitable as the business grapples with plans to produce annual savings of up to half a billion pounds within four years. Some £100m of savings have been identified without the need for redundancies but the next phase could see as many as 5,000 posts axed. It comes as the group presses ahead with its "Have Your Say" survey of the public, staff, and Co-operative members. This could result in the withdrawal of political donations to Labour if, sources said, there was "a sufficiently strong reaction".
That and other reconstruction measures is already thought to be leading to tension between elected board members and the group's professional management, led by Euan Sutherland, a former chief operating officer at Kingfisher, owner of the DIY chain B&Q.
Co-op said: "As part of the wider strategic review of all of its businesses, the group has decided that its farms are non-core and has started a process that is expected to lead to a sale of the business. In addition, it is exploring options for the future of the pharmacy business; this could include the sale in whole or part of the business."
The decision to terminate the group's farming interests will have more of a psychological impact than a business impact. The group's 15 farms supply only between 2 and 3 per cent of the retail operation's product. They still make Co-op the biggest individual farmer in the UK. The farming interests have deep roots within the business, dating from the foundation of the Co-operative Wholesale Society in the 1860s.
The Co-operative movement was founded by the Rochdale pioneers 20 years before that, with the aim of supplying high-quality goods to working people who were suffering from depressed wages and struggling to pay for food amid the advent of industrialisation. Its entry into farming was born from a desire to source unadulterated flour, which was at the time proving a challenge.
The pharmacy business was built up gradually as the central Co-operative Wholesale Society steadily took over smaller Co-ops, often when they ran into financial problems and were left owing it money. Expansion took off in the 2000s when payments for handling prescriptions boomed. While operating profits of £28m were produced last year, the business is facing a squeeze amid government attempts to rein in costs. It is also seen as less well integrated into the rest of a group which needs to develop cost-cutting synergies.
- 1 Kylie Jenner challenge: Bizarre lip suction device inspired by Kardashian sister goes viral
- 2 Rarest Beanie Baby bought for just £10 at car boot sale could be sold for £62,500 on eBay
- 5 Giorgio Armani criticises the way some gay men dress saying 'a man has to be a man'
Rarest Beanie Baby bought for just £10 at car boot sale could be sold for £62,500 on eBay
Katie Hopkins and The Sun editor are reported to police for incitement to racial hatred following migrant boat column
Australian student Tommy Connolly, 23, adopts his pregnant, homeless 17-year-old cousin to give her a chance at 'a better life'
Giorgio Armani criticises the way some gay men dress saying 'a man has to be a man'
Electronic waste worth £34bn piling up in 'toxic mine', warns UN report
If I’m being racially abused I don’t need a stranger with a saviour complex to rescue me
The only black face in the Ukip manifesto is on the page about overseas aid
Ukip is the only main political party to not address LGBT rights in its manifesto
Food banks: One million Britons will soon be using them, according to Trussell Trust
Religion isn't growing, it is becoming vigorous in its demise, says philosopher AC Grayling
BBC election debate: The one photo that summed up the whole 90-minute leaders debate
iJobs Money & Business
£30 - 35k (DOE): Guru Careers: We are seeking a Pricing Analyst with experienc...
£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...
£21000 - £24000 per annum: Ashdown Group: The Ashdown Group has been engaged b...
£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, int...