The Co-op Group has reported its underlying profits dropped 57% year-on-year in FY21 from £235m to £100m, marking a loss of £32m amid reduced availability of certain products in the group’s food stores following the effect of Covid on global supply chains.
Pre-tax profits also fell 55% from £127m in FY20 to £57m, and total group revenues decreased 2.8% year-on-year from £11.5bn to £11.2bn, due to “unusual” customer behaviour at the start of the pandemic in both the Co-op’s Food and Wholesale businesses.
Total sales also dropped 2% from £9.3bn to £9.1bn year-on-year across Co-op’s Food and Wholesale segments, with its Food sector seeing a 55% reduction in underlying profits year-on-year from £350m to £156m, although this includes the repayment of £13.6m of furlough assistance received in that business in 2020.
Sales in Co-op’s Wholesale business also fell 12% from £1.6bn to £1.4bn in FY21, however, there is two year growth in both of these businesses with two year like-for-likes in Food (excluding fuel) of 3.3% and in Wholesale of 9%.
Co-op said its lower sales are due to changing customer habits impacting margins with smaller basket sizes and higher sales of low margin fuel being seen compared to the pandemic.
The group added that its decreased profits are driven by investments into its businesses and colleagues, the annualisation of the impact of Covid on customer behaviour and associated additional costs, and supply chain issues resulting from the pandemic that have impacted profits year-on-year.
Allan Leighton, chair of The Co-op Group, said: “The last couple of years have exposed even more the inequalities that exist within society and we must play our part in helping the nation recover and redress the balance.
“The second half of the year proved to be a very challenging one within our Food business, where the well-publicised supply chain issues affecting the sector significantly impacted upon our trading performance.”
He added: “It is important that we keep our eyes totally centred on our business performance, our investment aligned with activity that will drive our price and product proposition, and our innovation focused on enabling us to compete and win within our chosen markets.”