Co-op reported strong underlying financial performance in its 2023 fiscal, with improvements in underlying operating profit, net cash, and further reductions in net debt, which has reduced by £827m in the last two years.
Excluding the impact of the petrol forecourt sale, revenue increased 4.7 per cent or £0.5 billion. All business units delivered underlying revenue increases in the year.
Underlying operating profit increased 17 per cent, all the more impressive given prior year includes earnings from the petrol forecourt business disposed of in 2022.
EBITDA remained broadly flat at £468 million (2022: £473 million), a result which the group said reflects the underlying strength of the business, given the inflationary headwinds, and with no earnings coming from the petrol forecourt business following its strategic disposal.
“Our relentless focus on strengthening our financial position has enabled us to navigate a highly turbulent external landscape, delivering increased value for our member-owners and planning for a future with confidence and with membership firmly back at the heart of our business,” Shirine Khoury-Haq, chief executive of the Co-op, said.
“Over the last two years, our net-debt has reduced by 90% from over £900 million, to £82 million today. Whilst markets remain challenging, we are in firmly in control of our Co-op and our destiny.”
The group's wholesale business, Nisa, saw revenue growing by 2.9 per cent to £1.4 billion (2022: £1.4 billion), but profitability decreased to £13.2 million (2022: £21.2 million), which the group attributed to the investments in enhancing the proposition for retailers to ensure their ongoing competitiveness. The group added 425 stores in 2023 and aim to gain a further 400 in 2024.
Franchise revenue increased to £56 million (2022: £54 million), with the addition of three new franchise stores and a new trial format in three petrol stations. Co-op said it has a strong pipeline of launches planned for 2024, including its first stores located in NHS hospitals.
The group surpassed expectations with substantial membership growth, now reaching 5 million active member-owners, and supported colleagues, members and communities through cost-of-living crisis, with £70m in 2023, annualised to £90m investment in lowering food prices and improved member-owner offers.
The group said it is well placed to drive growth with clear focus on increasing the number of member owners from 5 million to 8 million, by 2030, as well as targeting additional growth through its three core business areas of Food Retail, Business to Business (B2B) and Life Services.
“2024 marks a significant shift as we begin putting in place the building blocks for our strategic growth plans across our Co-op, with a focus on growing our existing businesses including increasing our share of the quick commerce market and expanding our presence within the life services sector,” Khoury-Haq added.
Food Retail
Food revenue was marginally down at £7.3 billion (2022: £7.8 billion), driven primarily by the sale of the petrol forecourt business. Revenue was up 4.3 per cent or £0.3 billion (2022 £7.0 billion), excluding the impact of the petrol forecourt sale.
Food underlying operating profit increased 11 per cent year-on-year to £154 million (2022: £139 million), attributable to enhancements in cost efficiencies, including improvements in availability, waste reduction, optimised stock-holding, and overall reduction in our cost-to-serve.
Online sales continued to grow, reaching £311 million (2022: £222million). The retailer secured the top position in the quick convenience market in the second half of the year (Neilsen), expanded its partnership with Just Eat to over 1,000 stores, and aim to grow from 23 percent currently to capture 30 per cent of the overall quick convenience market share in the next 4 years.
Brian McLister
