Co-op is still thriving in convenience stores battle

The Co-op on Thursday said it is holding its own in the convenience stores sector, despite ever “fiercer” competition and a continued squeeze on consumer spending.

In half-year results, the group’s food division recorded its 14th consecutive quarter of same-store sales growth, with operating profits up 22% to £77 million. But industry data this week showed slowing sales.

The improvement in food retail comes a year after the group, which also sells funeralcare and insurance, relaunched its membership scheme. Having recruited half a million in the first half, the Co-op has an active membership of 4.5 million.

The £35 million cost of the scheme, combined with a weaker performance in insurance, meant underlying group profits dropped 48% to £14 million.

Chief executive Steve Murrells said: “I think we are going to see inflation for a while. It’s going to have a greater effect on premium businesses, which is why it’s important for the Co-op to show its difference in the way we do things.”

The Co-op is in talks with wholesaler Nisa over a £140 million takeover. The group sold its remaining stake in the Co-op Bank for £5 million.