Major UK convenience retailer Co-op has reported strong trading results for 2019, with total revenue up 7% and underlying profits up 50% like-for-like. The retailer’s results statement also included an update on how it is supporting customers and colleagues through the Coronavirus (COVID-19) crisis.
FY2019, 52 weeks to 4th January 2020:
- Total revenue £10.9bn, +7% vs 2018 (previous year +14%)
- Food revenue £7.5bn, LFL sales +1.9% vs 2018 (previous year +4.4%)
- Wholesale revenue £1.4bn, +27% vs 2018
- Group underlying profit before tax £50m, +50% vs 2018
Strong retail performance
Total group revenue was driven by the continued strong performance of Food which has delivered six years of LFL growth. The Wholesale division (acquired in May 2018) increased LFL revenues by 1.1%, outperforming the market by 1.4%.
Co-op operates 2,600 UK stores. During the period, Co-op opened 79 new stores, refitted 152 stores and extended 10. The Nisa acquisition continued to deliver volume growth for Wholesale business (through which Co-op supplies an additional 5,100 stores) against a strategy of increasing Co-op buying power and achieving wider distribution of Co-op own-brand products into more communities.
The retailer launched a successful trial of home delivery with online same-day services now being expanded, including an option via delivery app Deliveroo. New product range highlights include the award-winning Irresistible pizza range and the rollout of the GRO vegan range.
Co-op’s Funeralcare and Life Planning revenue reduced year-on-year (-3.2%), reflecting moves to cut prices and improve choice and a lower death rate, however a turnaround strategy is now in place.
Legal Services revenues increased 13% to £40m, making Co-op the leading personal legal services provider in UK. The retailer re-entered the life insurance market and its Insurance business began to deliver on a strategy of developing and distributing more products and solutions for members. Following launch in May 2019, the Co-op Health app was downloaded more than 150,000 times.
Co-op community contribution
The Co-op is owned by millions of UK consumers (its 4.6m active members) and has a clear purpose of championing a better way of doing business. In 2019 it returned £76m to members and communities; £59m directly to members and £17m to 4,400 local causes. Co-op traditionally attracts older shoppers but in 2019 36% of new members were aged 35 or under showing that it is starting to appeal to younger age groups.
In 2019 the retailer issued a £300m sustainable bond, with proceeds used to drive Food’s Fairtrade offer, ensuring better deal for producers. It also invested a further £1.2m into Co-op Academy schools, as part of a four-year commitment to invest £3.6m. Six new schools opened, taking the total to 24 at year end with plans to grow to 40 in the next two years
Co-op also launched a community strategy around Spaces, Skills, Sustainability and Wellbeing, including activities to reduce plastic use and food waste, and further developed its award-winning Safer Colleagues, Safer Communities campaign.
Coronavirus (COVID-19) update
- Co-op colleagues in Food and Funerals recognised as key workers and rewarded with £150 bonus and an extra day’s holiday
- 7,000 temporary jobs created and filled within seven days
- New Co-op Members’ Fund established to support Foodbanks, address funeral poverty and help local causes
- £1.5m of food delivered to FareShare
- Vouchers given in lieu of free school meals to Co-op Academy pupils
- Online resource ‘Co-operate’ launched to direct those in need to local and national support initiatives
- 700+ Member Pioneers continuing to support volunteering initiatives in their areas
- Read more on Co-op’s COVID-19 response here
Co-op expects additional costs associated with COVID-19 to be over £200m, although this will be partly offset by increased food sales and the business rate relief scheme. Against this backdrop, Co-op’s strategy remains to deliver sustainable growth and to continue to add value for members and for communities.
Steve Murrells, Chief Executive of the Co-op, said:
“The Co-op made further financial progress through 2019, showing that co-operation is working. While we didn’t know it at the time, that performance set us up well to withstand the impact of the COVID-19 crisis and to enable us to support the communities we operate in."
“Against the backdrop of COVID-19 we will review the strategy we had embedded across our businesses, aligning commercial and community objectives. Our responsibility as a co-op is to ensure that through our businesses, our wider influence is used to make the communities in which we operate feel stronger and more connected. That drives the business decisions we make – not profit alone and not shareholder value. The importance of that has never been so stark and we will continue to play our part for as long as we need to.”
Read more about Co-op on our Co-op retailer hub