The Co-op warns of future challenges as sales flatline and profits slashed
29.09.2022 - 13:17
/ manchestereveningnews.co.uk
The Co-op has warned it will continue to face challenges in the future after revealed its profits were cut by £37m during the first half of its financial year.
The Manchester-headquartered group has reported pre-tax profits of £7m for the six months to July 2, 2022, compared to the £44m it achieved during the same time in 2021. It also confirmed that its revenue had stalled at £5.6bn.
The results come after the Co-op announced in July plans to cut 400 jobs, with the majority based at its head office in Manchester.
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The group blamed a 'tough trading environment' for the move as well as the rise in inflation. It also said will bring forward planned cuts as well as reduce roles by not filling vacancies.
In a statement, the Co-op said that 'decisive management action' had been taken to reduce operational costs, improve operational performance and prioritise capital expenditure.
It added that its net debt had been reduced through improving its cashflow. The group also said its deal to sell 129 petrol stations to Asda for £600m would also help drive down debt.
On its sales, the group said that in 'very challenging markets' it delivered a 'robust' performance while Co-op Food revived its market share to 6.5 per cent.
It also revealed that energy and wage inflation increased costs by around £50m compared to the same six months in 2021 before 'mitigating cost savings, and rates holidays in H1 2021 create a further £20m adverse variance'.
The Co-op added that it expects cost savings to reach £150m in 2023.
Chief executive Shirine Khoury-Haq said: "Against a highly challenging economic backdrop, we have made significant progress in strengthening our