Today’s earnings from the Co-operative Group highlighted the efficacy of stringent cost-cutting measures at the multifaceted British consumer business.
Revenues for the first half were down slightly – from £5.6 billion to £5.4 billion to be precise – but the group managed to pen a £43 million operating profit, marking a successful turnaround from the £1 million in operating losses penned in the first half of 2022.
Underlying earnings improved 14% to £226 million.
The group still posted underlying losses before tax of £9 million, though this was a significant year-on-year improvement from the £68 million in losses last year.
Revenues in the ore retail segment fell from £3.9 billion to £3.6 billion, largely driven by the sale of its petrol forecourt business (this sale did, however, help to reduce debt to historic lows).
Shoplifting woes
Like its retail competitors, Co-op is suffering greatly from a surge in shoplifting and other in-store crimes.
In the earnings statement, Co-op disclosed that “in the six months to June 2023, we recorded the highest-ever levels of retail crime - 175,000 incidents of shoplifting and anti-social behaviour, almost 1,000 a day and a 35% year-on-year increase”.
Leakage costs attributed to theft and fraud were around £33 million in the first half of the year, an eight-figure sum clearly being felt on the bottom line.
Co-op has gone on the antisocial behaviour defensive, building secure kiosks, locked doors on high-value products, dummy packaging and automated CCTV networks.
“We're also re-evaluating our approach to guarding, deploying tactical teams and working closely with local police authorities,” said the group.
Legal services pull ahead
Though food retail and wholesale comprise the vast majority of Co-op’s revenue base, its niche chains are outstripping these core offerings on a growth basis.
Funeralcare revenues increased 5.8% to £14 million while insurance revenues increased 27% to £14 million thanks to a strong showing in the pet insurance space.
However, legal services were the real MVP, with revenues up 41% to £31 million.
Probate case openings increased by 22% to 4,738 cases in the period, while estate planning case openings increased by 30% to 12,138 cases.
Co-op saw significantly higher digital referrals, up 51% year on year, supported by the expansion of its digital customer-facing services such as electronic ID checks.
Commenting on the financial performance across the whole group, chief executive Shirine Khoury-Haq stated: “The business momentum established in the second half of the last financial year has carried through into the first six months of 2023 and has allowed us to significantly strengthen our membership offer and proposition - we have put our member-owners at the heart of what we do.