Richard Pennycook, previously the group’s finance director who had been leading the group on an interim basis, has been taken on its permanent chief executive. The appointment comes as the Co-op returns to profit for the six months to 5 July with income of £12m, an improvement on the £767m loss made a year ago.
Group revenues fell by 3.7 per cent to £5.1bn while underlying profits also fell to £66m, from £116m the previous year. The company says that reflects its actions to implement new strategies across its retail and consumer services division and the recapitalisation of the bank, which increased its debt.
The food business is continuing to see improved performance, with like-for-like sales up 1 per cent overall and 4 per cent at its core convenience stores. The Co-op has so far invested £74m in opening 21 convenience stores and refitting 50 others and plans to increase that to 100 new stores and 300 more refits by the end of the financial year.
It is also putting considerable investment in new products and revamped ranges, as well as price, with the second round of its “Fair and square” price cuts coming into effect this week on products including own-brand ketchup. The company claims it has seen a 6 per cent rise in sales in categories that have already seen their prices drop, including bacon and bread.
The Co-op also plans to roll out contactless payments across its entire estate.
In its consumer division, the Co-op says it is working to improve its online presence, with a range of new digital services for its funeral care business set to be unveiled. That will be supported by a national ad campaign launching later this month.
The insurance business will also benefit from an increase in marketing activity and a national ad campaign that will roll out later in the year.
The Co-op has recently disposed of its pharmacy, farms and Sunwin services businesses and conducted a wider overhaul of its operations to improve governance, including the creation of a smaller board of 11 people. Pennycook says the new structure will enable the Co-op to “look to the future with greater confidence”.
“Looking ahead, we are confident that we are doing the right things to ensure that the performance in all our businesses is what our millions of members and customers expect. By focusing on our customers, our members and their communities, we will revitalise the Co-operative Group,” he adds.
The Co-op bank is also planning a marketing push as it looks to rebuild in the wake of financial problems and a drugs scandal involving its former chairman. Since the recapitalisation of the bank, which saw the Co-op Group’s ownership reduce by about 20 per cent and majority control passed to bondholders, the bank has set about trying to recapture lost trust, launching a review that canvassed the opinions of customers on its values and ethics.