Diverse business portfolio helps Co-op make £4.5m annual profit
The East of England Co-op says it is in a strong position to weather the coronavirus storm after generating trading profits of £4.5 million in a challenging market for the 2019/20 financial year.
A decrease in underlying trading profit had been anticipated due to the rising costs of doing business and the impact of the increased National Living Wage.
Doug Field, joint chief executive, said: “Our colleagues are our greatest asset. The care they show for our communities has been welcomed by our members, never more so than during the recent unprecedented outbreak of COVID-19.
“Colleague, member and customer safety remain our top priority. We have invested hundreds of thousands of pounds into measures to keep both our colleagues and customers safe, including the installation of screen at all till points, and providing gloves, hand sanitiser and face coverings for our colleagues.
“This investment has been made possible by our financial strength and the resources we have at our disposal.”
He revealed that over the past five years the organisation had invested more than £76m in its business, introducing new technologies and refurbishing stores and branches.
Field added: “Although overall sales were down last year, due in part to the sale of our Pharmacy and Optical businesses and the closure of our distribution centre, sales from continuing businesses grew by 1.8 per cent (£6m) and cashflow by £0.7m.
“As the principle part our business, we were pleased to see a £5m increase in food sales, with over £1m of locally sourced produce sold in just one fortnight.
“Rental income from our investment property portfolio, valued at over £118m, now exceeds £8.1m – a £0.1m increase in the year. Our security business, Co-op Secure Response, has continued to see growth with sales now in excess of £1.5m.
“We broadly maintained our market share, despite sales from our Funeral Services falling, with just over 120 fewer funerals conducted.
“Investment made in our stonemasonry business, H L Perfitt, during 2018 helped achieve sales growth of 15 per cent, whilst our Travel and Events businesses retained a steady performance.”
Underlying trading profits, which saw a decrease of 19.2 per cent, were impacted by increasing personnel costs due to the rise in the National Living Wage. This also impacted profits in the East of England Co-op’s Food business.
Reflecting on recent months and those ahead, Field explained: “It is impossible to predict the full financial impact of COVID-19.
“In the first few weeks of the pandemic, we saw a double-digit uplift in sales, with panic buying clearing the supply chain of certain items. This is now stabilising, and we are beginning to see more normal sales volumes return.
“Moving forward, we will continue to prioritise colleague, member and customer safety. We will continue to focus on improving the daily lives of members, customers, colleagues and communities. We will continue to invest in new technologies and in the refurbishments of our stores for the benefit of our members and customers.
“We are confident for the future, despite the current pandemic. We have a robust balance sheet and the resources we need to see us through the foreseeable future.”
While the Co-op has postponed the Annual Members’ Meeting and director elections until it is safe for members and colleagues to come together, the board have agreed to the distribution of a £2.1m dividend.
This year, they are capturing members generosity, encouraging them to donate some or all of their dividend to the recently launched East of England Co-op Community Cares Fund, which the retailer kick-started with a £230,000 donation.
Field said: “We have been overwhelmed with the response so far. Thanks to the generosity of our members, over £75,000 has already been donated, bringing the total of the fund to over £306,000. In June we will be writing to all our members receiving dividend this year, so we hope this total will rise even further.”