Co-op looks to funeral arm in hunt for turnaround from cyber-attack
Co-op posted a jump in turnover at its funeral arm, as the member-owned group said it is setting out the foundations to recover from a costly cyber-attack last year.
Kate Allum, interim chief executive of the food-to-insurance firm, said the group is facing a “year of two halves” and will see its turnaround plan deliver growth later in the year.
Co-op’s IT networks were infiltrated by hackers in April last year, in an incident which lost the company £206m in revenue and dented its profit by £80m.
The group said on Wednesday that it saw total sales jump by 2.4 per cent in the six months to July. Trading has gained momentum in recent months, the firm added.
These figures compare to the peak period of disruption from the cyber-attack last year, Co-op said, though it added that this sales growth was achieved despite “soft markets with continued weak consumer confidence”.
The company’s ‘life services’ arm was the standout performer in the first half of the year, delivering an underlying profit of £28m, higher than its food business’s £18m.
Co-op benefited from an eight per cent uplift in funeralcare revenue, which it said was achieved despite a falling death rate pushing down the size of this market.
The group’s market share in the at-need funeral sector is at its highest since 2020, as sales in this market jumped by six per cent.
Co-op’s legal services revenue jumped by 15 per cent and insurance sales surged by 20 per cent.
Co-op: Conditions remain ‘challenging’
The firm said it is piling investment in its stores and spending more on discount pricing in a bid to drive its recovery, contributing to its £11m jump in operating loss to £45m.
In March, former chief executive Shirine Khoury-Haq announced she would be stepping back to allow the group to move on from the cyber-attack. She had been in charge when the firm was rocked by accusations of a “toxic culture” at its highest levels.
Allum said: “The first half was characterised by difficult markets and low consumer confidence, especially for Food Retail. Against those conditions, we made decisions to drive trade – investing in promotions and investing in our stores – while also mitigating rising costs.
“Speaking now in the second half, we’re seeing bigger baskets and more transactions. Conditions remain challenging, but we see reasons for confidence across our portfolio, having delivered strong growth in areas such as online convenience shopping and funerals.”
In July, Co-op saw more than 300,000 new members join the group as part of its takeover of the Southern Co-op.
Earlier this month, the UK’s competition watchdog warned that it could investigate the merger over fears that it would “substantially” lessen competition in the sector.
“This merger will be referred for an in-depth, phase two investigation unless the parties offer an acceptable undertaking to address these competition concerns,” the Competition and Markets Authority (CMA) said.