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Co-op pledges to invest on and offline despite difficult economy

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The Co-operative Group says its online electricals business is growing its profits despite difficult trading conditions in the sector. It is now planning investment in the business, including a new website launch for the business. It will also stock more of its electricals products in food stores as part of a developing multichannel strategy.

The company, which this week reported its results for the half-year to July 2, said sales at its e-store rose by 1.1% in the period while operating profit rose by 29.2%.

The group has piloted multichannel services, taking its online electricals business into food stores. New formats are now being trialled in different store sizes and, said the group: “Initial results are very encouraging.” In the second half of the year it now plans to improve its range while also launching a new website. The period will also see it look at ways of improving its delivery service, which already offers rapid delivery options.

The update comes as the company reports a fall in turnover and profits in the first half of the year. Sales in the period fell less than one per cent to £6.89bn from £6.95bn at the same time last year, while underlying profits fell 12% to £230.8m from £262.3m last time.

Underlying operating profits in its core food market fell 21% to £135.4m from £171.6m last time. Its financial services arm reported more encouraging news with a 20% rise in underlying operating profits to £131.3m from £109.3m last time.

Peter Marks, group chief executive, The Co-operative Group, said: “At the full year we warned that the downturn was biting deeper than anyone had expected and predicted that challenging trading conditions would continue into 2012. This has clearly proved to be the case.

“Indeed, it is the worst I have seen in over 40 years of retailing and, against this backdrop, the results we are announcing today are in line with our expectations. It is a mixed picture, but one that shows the strengths of having a diversified portfolio of great businesses.”

He said he did not see any real signs of improvement in the economy but that the company would continue to invest through the downturn in order to be well-placed for growth when the economic upturn begins. “Our ownership model means that we can take a long-term view and we are as driven, determined and ambitious as ever to modernise our business,” he said.

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