Co-op firmly on track as £400m investment drives rebuild

07 April 2016

  • Core convenience food business winning market share
  • Funeralcare growing strongly and announces future plans
  • General Insurance delivering against member-focused strategy


  • Group revenue stable at £9.3bn (2014: £9.4bn)
    • Food like-for-like sales grew by 1.6%, with like-for-like volumes up 5%. Core convenience business grew ahead of market after investment in price and products, with like-for-like sales up 3.8%
    • Funeral sales increased by 9.9%, driven by highest death rate since 2008. Plans to open another 200 funeral homes in the next three years, increasing size of estate to over 1,100 homes
    • General Insurance (GI) sales perform in line with expectations, as it starts to deliver against its member-focused strategy
  • Group underlying profit before tax* of £81m (2014: £73m)
  • Profit before tax of £23m (2014: £124m), reflecting major investment in the business this year and 2014 profits being bolstered by £121m from one-off disposals last year, without which the statutory profit for 2014 would have been break-even
  • First year of three-year Rebuild phase sees investment increase in line with plans
    • Costs of supporting functions increased to £160m (2014: £129m), in line with Rebuild plans
    • Group capex of £320m (2014: £294m)
    • 8.5% pay award for 40,000 front line store colleagues, driving pay above Government’s National Living Wage threshold well ahead of its implementation
    • Significant investment to reduce prices in Food, including 15% reduction in fruit and vegetable prices
    • Group underlying operating profits in 2016 expected to be lower than in 2015 due to continued investment in Rebuild
  • Net debt steady at £0.7bn (2014: £0.7bn), in line with stated aim to keep debt below £0.9bn through Rebuild
  • New national charity partnership with the British Red Cross launched with campaign to tackle loneliness as Group returns to its campaigning heritage

Richard Pennycook, Chief Executive of The Co-operative Group, said:

“This has been a year of further progress at the Co-op as we have invested to drive the growth of our businesses. Underlying profits have increased but our priority this year has been on putting the building blocks in place for the long-term. Whether it’s our investment in lowering prices, rewarding colleagues or campaigning on key issues, we are taking the right steps and the performance of our businesses and the feedback from our members shows us we are on the right track.

“We are, however, only one year into our Rebuild and whether it is driving further growth in our businesses, improving member engagement or getting back to our campaigning roots, there is still much to achieve.

“We are championing a better way of doing business for our customers and communities and working with our colleagues and members we’re confident that we have a strong plan to achieve our goals.”

Allan Leighton, Independent Non-Executive Chair of The Co-operative Group, said:

“The Co-op’s confidence is growing and our members, customers and colleagues are starting to see the difference. We are now the UK’s most frequently visited food retailer, while our other core businesses, from Funerals to General Insurance, are also showing strong signs of progress. 

“Our ownership model allows us to invest for the long-term and our members and our customers are seeing the results as we improve our offer and demonstrate what makes us different as an organisation.

“As well as investing in our businesses and our people over the last year, we have continued to invest in our governance to harness the passion our members and colleagues have for the Co-op. Our Board and Council are working together in support of our membership and later this year we will unveil exciting plans to drive member engagement even further.”

Summary of business performance 

Our core businesses made good progress, though their performances continue to reflect the different stage of each in the Rebuild process, with the new strategy for the Food business launched ahead of our other core businesses:


  • Food like-for-like sales grew by 1.6%, with like-for-like volumes up 5%. Core convenience business grew ahead of market after investment in price and products, with like-for-like sales up 3.8%. On a two-year basis, convenience like-for-like sales were up 7%
  • Underlying profit rises 3.3% to £250m (2014: £242m), driven by strong sales and cost efficiencies
  • According to Kantar, we are the most frequently visited major retailer in the country, helping our customers shop little and often and at lower prices through our core convenience offer
  • 97 new Food stores opened, taking our estate to over 2,800 stores, and refitted a further 264 stores nationally
  • We invested £125m lowering Food prices and supported healthier eating choices by cutting the price of fruit and vegetables by more than 15% in 2015 alone
  • We further improved range availability and launched a pilot to work with 50 local suppliers in Yorkshire to champion locally sourced food. To reduce waste at our food depots, we joined with the charity FareShare to send surplus food to food banks
  • Over 800 of our colleagues volunteered to act as Community Pioneers across our stores nationally, acting to champion local causes and support communities


  • Our market-leading position has been further strengthened in a year when underlying profit rose to £78m (2014: £66m) on sales up 9.9% at £399m (2014: £363m)
  • The high death rate continued; it was busiest year since 2008 as business volumes were up 5.5% with over 97,000 funerals conducted
  • We continued to significantly invest in our services, spending £6m on our funeral homes and £9m on our vehicles
  • We opened 25 further funeral homes and continue to be the only UK funeral director to offer an apprenticeship in Funeral Operations and Services, signing up our 1,000th apprentice
  • Post the year-end, we launched our Simple Funeral, cutting the price of our lowest price funeral by 7%, making our products more affordable without compromising on quality

General Insurance

  • Our sales performance was in line with expectations. The managed withdrawal from less profitable business lines in 2014 led to Net Earned Premiums  declining to £343m (2014: £371m). However Gross Written Premiums increased due to a rise in new motor business during the final quarter of 2015
  • Profit was also in line with expectations until the impact of flooding in the North of England (£13m) led to the business recording a loss of £13m (2014: £1m loss)   
  • Roll-out of our new member-focused strategy began following agreement with IBM to build and run integrated insurance IT platform, creating infrastructure to drive significant growth in the future
  • Response to the floods in the North of England during December demonstrated our commitment to our policyholders
    • 174 flood victims were temporarily re-homed
    • Severely affected customers received £50 of Co-op Food vouchers to help them through Christmas

Legal Services

  •  Legal Services returned to profit of £0.7m (2014: £5.0m loss) following work to reduce costs in 2014
  • Revenues in 2015 fell in line with our plans to £18m (2014: £21m) as we refocused the business back to core service propositions
  • Acquisition of Collective Legal Solutions Group Limited, a national provider of Wills, Trust and Probate services


  • Strong internet sales offset by lower wholesale volumes, leading to total sales falling to £79m (2014: £84m)
  • Challenging market conditions led to a full-year loss of £1m (2014: £0.8m profit)  
  • Strong focus on customer service highlighted by 98% customer satisfaction rating
  • Success roll-out of cost price extended warranties, with three times as many customers buying them compared to 2014

Membership, democracy and governance

  • We got back to our campaigning roots with the launch of a campaign with the British Red Cross to tackle the national issue of loneliness 
  • Members’ Council established in May, following on from Transitional Council operating from November 2014, with Nick Crofts elected as new President in July 2015
  • Strengthening of the Group Board with Stevie Spring and Peter Plumb appointed as Directors and Hazel Blears, Paul Chandler and Ruth Spellman elected as Member Nominated Directors 
  • Process underway to appoint an additional Member Nominated Director to the Group Board, which would increase their number to four
  • In keeping with previous guidance, The Board anticipate dividend payments resuming after the three-year Rebuild programme completes at the end of 2017


Our core businesses have enjoyed a strong start to 2016. In Food, convenience sales have continued to grow ahead of the market, with Co-op shoppers buying little and often as they welcome the investment we continue to make in prices, products and service. Our Funeralcare business has had a quieter start to 2016, with the mild winter reducing the death rate, but sales of pre-paid funeral plans continue to rise significantly. In General Insurance we have continued to enjoy strong new motor business sales.
We have exciting plans to drive the growth of our core businesses this year. In Food, we plan to  open 100 new stores and refit a further 150 existing sites, while we invest even further in price and products, building on our recent price cuts to our our-brand meat and poultry products in support of British farming. In Funeralcare, we have clear plans for growth and expect to open more than 200 new funeral homes over the next three years, taking our estate above 1,100 homes across the UK. In General Insurance, we expect to make significant progress in 2016 as we provide greater service and product capability for our 1.4m customers as we begin to move across to our new IT platform.
While we expect conditions to remain challenging across our markets in 2016, we are looking forward to a year of further progress as our three-year Rebuild journey continues at pace. In line with our long-term plans to drive the Group forward, we will continue to invest in our businesses and this is expected to lead to underlying operating profits for the full year being below those in 2015. The Board anticipate dividend payments resuming after three-year Rebuild programme completes at the end of 2017. 
We are confident that the Rebuild, and the investment we are making as part of it, will further strengthen our businesses in 2016, for the benefit of our colleagues, members and customers. In line with our commitment to champion a better of doing business for our members and their communities, we look forward to launching our new membership proposition at our AGM in May this year.

Media Enquiries:

The Co-operative Group

Jon Church
Tel: 07545 210812  
Russ Brady
Tel: 07880 784442

Tulchan Communications

Susanna Voyle
Jonathan Sibun
Tel: 020 7353 4200

Notes to editors

About The Co-operative Group

The Co-operative Group, one of the world’s largest consumer co-operatives, with interests across food, funerals, insurance, electrical and legal services, has a clear purpose of championing a better way of doing business for you and your communities. Owned by millions of UK consumers, The Co-operative Group operates a total of 3,750 outlets, with more than 70,000 employees and an annual turnover of over £9 billion
Amongst its other wholly-owned businesses are the UK’s number one funeral services provider, a major general insurer and a developing legal services business.

The Group also has a minority shareholding in The Co-operative Bank and a joint-venture travel business with Thomas Cook.

* Underlying profit before tax is profit before tax but stripping out the effects of property disposal profits, changes in the valuation of investment property, one-off items, fair value movements on loans and borrowings, and pension interest. This is consistent with other retail plc underlying profit measures

Co-operative Group Limited announces that the 2015 Annual Report and Accounts have today been submitted to the National Storage Mechanism and will shortly be available for inspection at:

A copy of the Annual Report and Accounts are also available at:

This announcement contains additional information for the purposes of compliance with the Disclosure and Transparency Rules. This information is extracted, in full unedited text, from the 2015 Annual Report and Accounts (the ‘Annual Report’). References to pages and page numbers refer to page numbers and notes to the annual accounts in the Annual Report.

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