Downturn's impact is the worst I have ever seen, says Co-op boss
The boss of The Co-operative Group has said trading conditions are the worst he has experienced in over 40 years of retailing as the mutual unveiled a drop in half-year profits.
The Co-op, the UK's fifth biggest food retailer, reported a 10% decline in underlying operating profits to £275.1m in the 26 weeks to July 2.
The mutual saw a boost to profits and sales in its financial services division, which includes the Smile bank and recently acquired Britannia building society, but this was overshadowed by a 5% drop in revenues and 21% fall in profits at its foods arm, which includes the Somerfield chain.
Peter Marks, group chief executive, 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 are in line with our expectations."
The food business recorded sales of £3.7bn in the half year, which were down from £3.9bn last year, and underlying operating profits of £135.4m, down from £171.6m.
"Intense competition from all major retailers, greatly diminished customer confidence and the start of the Government's austerity cuts have all had a part to play," the group said.
The company has committed to investing £2bn in the business over three years, with £280m spent in the period.