The Co-operative Group has recorded a 1.1% drop in half-year like-for-like sales in its food division.
While food sales fell by 2% during the first quarter of the year due to the cold weather in March, they improved during the second quarter, owing to the June heatwave. Overall, operating profits in food slipped 1.3% to £117.4 million, with sales down 0.4% to £3.6 billion.
The group stated that operating profits had fallen due to 'continued investment in the business', with £22 million going into its new distribution centre at Castlewood. The retailer also reduced prices on more than 1000 products during the period and opened ten stores as well as a new 'state-of-the-art' Taste Centre.
The retailer plans to open 25 new stores during the second half of 2013, with a further 125 stores planned for 2014.
'The first half of the year saw the Food business deliver a solid performance against the backdrop of a difficult economy and continued fierce competition', the retailer said.
'We anticipate a stronger second half as the benefits of our food strategy start to be realised in better stock availability, improvements to the customer offer and with the refit of more than 400 stores'.
The Group reported an overall group loss of £559 million and a 1% drop in sales to £5.7 billion, with the banking business reporting losses of £709 million.
“This has been a very difficult first half for The Co-operative Group and the results highlight both the well-documented challenges faced by The Co-operative Bank and the significant work to do at Group level," Euan Sutherland, Group chief executive said.
He continued, “We remain convinced of the considerable potential to be realised across the Group and are confident that we are well placed to restore the Co-operative brand to its rightful place at the heart of communities up and down Britain. We will recapture the relevance of the Co-operative Group by bringing modern day disciplines and performance management to bear on the mutual model."
Figures release by data agency Kantar Worldpanel yesterday show a drop in the Co-op's grocery market share from 6.8% to 6.6% in the 12 weeks to 18 August 2013.
© 2013 - ESM: European Supermarket Magazine by Ellen Lunney
