Co-operative Group profits plunge 16%
Profits at the Co-operative Group have fallen by a third after its food stores suffered "fierce" competition from supermarkets and its banking arm was hit by the recession.
The group, which last year admitted it was battling the toughest conditions for 40 years, said its 3,000-strong food store division was also hurt by the wet weather as people drove to supermarkets rather than walk to local shops.
Underlying sales in the division fell 1.2% in the 26 weeks to June 30, while operating profits dropped 16% to £119m.
Its banking division, which has agreed to buy 632 branches from Lloyds, also felt the pain, with operating profits down 67.9% to £36.9m as it bore the brunt of the UK's double-dip recession.
With its two biggest divisions suffering, overall group profits fell 34% to £174m. Chief executive Peter Marks, who recently announced his retirement, said: "A year ago, I warned that we were operating in the worst conditions that I have seen in more than 40 years in business.
"The results we are announcing today show the full impact of that, with the profitability of our two biggest businesses affected."
However, the group said it was confident that sales and profits would improve in the second half of the year.
The supermarket is the UK's fifth biggest grocer but has been struggling as Tesco and Sainsbury's have ramped up openings of their own convenience stores in recent years.