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Co-op boss Richard Pennycook demands pay cut as firm enters 'calmer waters'

Published 07/04/2016

Richard Pennycook has asked for the board to slash his pay from £1.25 million to £750,000
Richard Pennycook has asked for the board to slash his pay from £1.25 million to £750,000

The boss of the Co-operative Group has demanded a pay cut after he said the firm had finally "turned a corner" thanks to rising sales.

Chief executive Richard Pennycook has asked the board to slash his pay from £1.25 million to £750,000 as the troubled mutual entered "calmer waters".

The firm said like-for-like sales across its 2,800 food stores grew by 1.6% in the 52 weeks to January 2, while its funeral business saw sales climb by 9.9%.

Mr Pennycook told BBC Radio 4's Today programme: "We've been through a difficult period which was very intense and I hope members would regard my remuneration as having been appropriate for that time, but we're now in calmer waters, we're a different sort of organisation owned by its members."

The firm said pre-tax profits hit £23 million, down from £124 million in 2014 when it was boosted by a £121 million one-off disposal.

It said underlying profits in the food business rose 3.3% to £250 million, as strong sales and moves to cut costs helped performance.

The funeral business also bolstered underlying profits by 18% to £78 million over the period.

Group revenues fell slightly to £9.3 billion, down from £9.4 billion in 2014, while group underlying pre-tax profits rose to £81 million, up from £73 million.

Mr Pennycook added: "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.

"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."

The cut to Mr Pennycook's base salary combined with a significant reduction in his bonuses will see his total pay drop by more than 60% .

Meanwhile, chairman Allan Leighton said he would wave his £250,000 annual pay and donate it to the Co-operative Community Investment Foundation.

The firm, which has 3,750 sites employing more than 70,000 people, said it would press ahead with its turnaround plan by opening 100 new food stores and refitting 150 existing shops.

It also aims to bolster its reach by opening 200 new funeral homes over the next three years, increasing its estate to 1,100 homes.

The expansion plans come after it invested £320 million on opening 97 food stores and refitting 264 shops in 2015.

But 91 food stores which no longer fitted its "focus on convenience shopping" have been sold off, raising £175 million.

Earlier this week, grocery analysis body Kantar said the Co-op's sales rose at their fastest rate since it snapped up Somerfields in 2011, climbing 3.9% in the 12 weeks to March 27.

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From Belfast Telegraph