Co-Op Has Worst Year Ever

Co-operativeThe Co-operative Group has experienced its worst year since the company began. It is expected to record losses of over £2 billion. Exact figures are set to be announced on 26th March.

The Co-operative Group is by far the largest Co-operative enterprise in the UK, and was first founded in 1844. The group has millions of members throughout the UK, including tens of thousands who are active. The current financial difficulties are leading to tensions forming between these active members and the group’s senior management, which is headed by Chief Executive Euan Sutherland.

There is also talk that efforts to revive the group’s fortunes may involve the sale of its 15 farms. These farms make only a tiny contribution to the food in stores, and are mostly dedicated to providing grains for the groups baking operations. Some sources claim that there is also talk of selling the group’s pharmaceutical operations, which consist of around 750 pharmacies and contributed £764 million in revenues to the group in 2012. The reasons for parting with the pharmacies reputedly relate to squeezed margins as a result of NHS efforts to cut the cost of prescriptions. Some claim that the pharmacies are also considered poorly-integrated with the activities of the wider group.

The predicted losses would make 2013 the poorest-performing year the group has ever experienced by a considerable margin. The huge losses are mostly due to the problems which have recently plagued the Co-operative Bank. The end of 2013 saw the bank bailed out after coming into serious trouble. The value of the group’s investment in the bank has seriously declined as a result, with a large percentage of the bank’s ownership passing to other parties.

It is reported that some stores have also declined in value, particularly those acquired when the group took over Somerfield.

In light of this poor performance, the group plans to drastically reduce running costs. Over the next four years, it is hoped that a total of £500 million will be saved, with sources for an estimated 20% of this figure already identified. Unfortunately, these savings are likely to result in job losses. Head office roles and support positions are expected to be hardest hit, and predictions for total job cuts by 2017 predicted to equal roughly 4-5,000.

Although 2013 looks set to be by far the worst loss the group has ever experienced, it will not be the first loss in recent years. 2012 saw the group take a loss of £648 million.