Interim profits fall over insurance losses
Co-Operative Group reported a loss of its pre-tax profits today while it sold its final one per cent stake in the Co-op Bank for £5m. The decline in profits is reported to have been caused by a £29m payout in discounts to shoppers and nearly £6m to local communities under its revived membership rewards scheme.
The group’s stake in the bank had fallen from 20 per cent to one per cent last month owing to £700m refinancing deal. With around four million customers, the bank was largely owned by five US hedge funds and had almost collapsed in 2013, before being bailed out by the hedge funds.
The Co-op launched the new membership plan in September 2016 through which shoppers got five per cent back on purchases, while a further one per cent went to their communities.
Talking about this scheme, Steve Murrells, the group chief executive of the Co-op, said that it helped increase sales of the group’s grocery stores by 3.5 per cent and is “absolutely the right thing to do when people are strapped for cash because of Brexit.”
He added that the scheme attracted 1.1m more members in the past year and allowed them to save and spend money from a digital wallet.
The mutually-owned group of grocery shops, funeral homes, and an insurance business reported a 48 per cent fall in interim profits after its insurance business fell into a loss. Besides this, the sales at the Co-op Food business rose for the 14th quarter in a row and its convenience stores also saw sales rise 4.5 per cent on a like-for-like basis.
The Co-op group is reported to be considering a £140m bid to take over the wholesale business that supplies 3,000 Nisa stores.