Co-operative Group posts record £2.5bn loss after 'disastrous year'
Interim chief says losses highlight 'fundamental failings in management and governance' at the Co-Op
Thursday 17 April 2014
The Co-operative Group has reported a record annual loss of £2.5 billion after suffering the worst crisis in the organisation's 150-year history.
The food-to-funerals group posted a £148 million operating loss in the year to 4 January, down from a £142 million operating profit the prior year.
The Co-op Group’s performance was hit by a heavy investment in its banking arm, which it owns a 30 per cent stake in, and a £226 million impairment payment on the acquisition of Somerfield in 2009.
The UK’s fifth largest grocer also suffered a decline in its food performance. Sales in stores open longer than a year fell 0.2 per cent but figures showed an improving trend, with sales up 0.6 per cent in the second half.
The retailer said food revenues and underlying operating profits were lower over the full year due to the cost of closing shops, a shorter accounting period and price reductions.
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Sales in its funerals arm rose to £370 million from £358 million in the prior year and underlying operating profit edged up by £2 million to £62 million. Pharmacy sales were down by £4m to £760m but profits rose by £5 million to £33 million.
Interim group chief executive Richard Pennycook said: "2013 was a disastrous year for The Co-operative Group, the worst in our 150-year history.
"Today’s results demonstrate that but they also highlight fundamental failings in management and governance at the Group over many years. These results should serve as a wake-up call to anyone who doubts just how serious the challenges we face are."
The Co-op has been enshrouded in controversy over the last year. The discovery of a £1.5 billion black hole in the bank’s funds, the scandal engulfing ‘Crystal Methodist’ Paul Flowers and last month’s departure of chief executive Euan Sutherland, who deemed the group “ ungovernable”.
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