Co-op warns about food supplies and inflation as profits fall 57%
The Co-op Group has warned of continuing problems with food supplies and inflation after revealing that profits more than halved last year amid supply chain disruption and higher staff wages.
The mutual said underlying profit for 2021, stripping out a one-off £99m gain relating to the sale of the Co-operative Bank in 2017, was down 57% to £100m, compared with the year before, and that sales slipped to £11.2bn, from £11.5bn.
Sales at the group’s food business fell by 2% to £9.1bn despite investing £140m in opening 50 new stores and refitting 87 more, and spending £18m on cutting prices. While in-store sales declined, online sales soared from £70m the year before to £200m thanks in part to tie-ups with Deliveroo and Amazon.
Sales also slipped at the Co-op’s funerals business, declining by £8m to £264m.
Shirine Khoury-Haq, the incoming interim chief executive of the Co-op, said:“The last year has seen us facing some significant challenges, including significant supply chain issues in the second half coming at the same time as our food business transformation and increasing inflationary pressures.
“The difficult operating environment disproportionately impacted our food business, given its focus on the community convenience market, with an operating model that is more reliant on flexibility in the supply chain.”
She said the Co-op would be reexamining its current strategy of opening 50 to 100 stores a year as she suspected change would be required given the shift to online shopping and cost challenges.
Khoury-Haq said inflation and supply chain problems were not just being prompted by the war in Ukraine, which has driven up the price of energy and affected supplies of wheat and edible oils.
Even the price of coffins in the group’s
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