THE chief executive of the Co-operative Group yesterday warned current trading conditions are the worst for 40 years as the company’s half year profits took a hit.
The group reported a 12 per cent drop in underlying profits to £230.8m for the six months to 2 July. Food sales were down to £3.7bn from £3.9bn last year.
The Co-op’s financial services arm saw underlying profits rise 20 per cent to £131.3m, with income up 16.7 per cent. However, the group has swallowed a one-off charge of £90m to cover claims for potential mis-selling of payment protection insurance (PPI).
Group chief executive Peter Marks (pictured) said competition, a lack of consumer confidence and government austerity measures were all factors behind the fall.
“At the full year we warned that the downturn was biting deeper than anyone had expected and predicted that challenging trading conditions would continue into 2012,” Marks said.
“This has clearly proved to be the case. Indeed it is the worst I have seen in 40 years of retailing.”
The retailer said that it would continue with a £2bn investment programme over three years. Co-op said it had already spent £280m on a revamp, has refitted 244 food stores and opened eight new outlets over the results period.
Marks added: “Looking ahead, we do not see signs of any real improvement in the economy and we are planning accordingly to help our customers as much as possible.
“We will find it difficult to match the record profits we made in 2010 with our investments,” he warned.