The Co-operative Group saw profits drop dramatically in the six months to July as the firm’s funerals business took a hit from an unexpected drop in the number of deaths.
Profit before tax sank to £25m, from £44m the year before owing to the funeral division’s poor performance.
Revenue, however, rose 12 per cent to £5.4bn thanks to strong food sales and Co-op’s recently acquired Nisa convenience store.
It also returne4d £29m to members, the Manchester-based group said.
Meanwhile group net debt rose from £714m in January to £784m.
Why it’s interesting
The Co-op suffered a blow in the first half of the year from an unexpected 10 per cent drop in UK deaths, sending funeral revenue dropping six per cent and hitting profits.
CEO Steve Murrells said the firm was now “actively repositioning” the division after funerals fell from 53,213 this time last year to 48,423 in its latest half-year.
He added that the company is working with the competition watchdog in its review into pricing in the market.
Co-op supermarkets enjoyed 1.7 per cent like-for-like growth while legal services saw probate revenue rise 37 per cent year on year and estate planning revenue jump 20 per cent.
But the business warned on the risk of a no-deal Brexit amid an uncertain outlook.
“In the event of a no-deal Brexit there is an increased risk of some disruption to our supply chain, however we will do all we can to protect our customers and members from this impact,” the firm said.
What the Co-op said
Steve Murrells, chief executive of the Co-op, said:
We’ve enjoyed another good six months where the strength of our business has led to a further £35m of value being generated for our members and their communities.
Our food business continues to perform strongly in a highly competitive market and has now recorded 22 consecutive quarters of like-for-like sales growth. As our largest business, it is providing the fuel for our growth in terms of member value and community impact.
In funerals we are actively re-positioning the business to meet the changing needs of our members. We are the market leader but we will also lead the market in providing better choices and options for our customers in the years ahead. Likewise, the development in our insurance, legal and health businesses will enable us to significantly broaden the range of Co-op services, in areas where our members know the Co-op difference can be clearly seen.