The Co-operative Group eyes sale of 300 food stores to focus on convenience
Around 300 Co-operative food stores could face the axe as part of plans to shed its larger shops and focus on expanding its more profitable convenience business.
The mutual, which has over 2,800 stores throughout the UK, is understood to have hired bankers at Rothschild to find buyers for the stores to help raise funds to spruce up the rest of its estate.
The Co-op is already selling around 100 unwanted properties it inherited from its ill-fated £1.6bn takeover of Somerfield in 2008. It is thought to be offering a dowry of £40m for prospective buyers of certain stores with onerous leases, although Co-op still expects to be cash positive after the sales.
Last week, the group posted a 1.6 per cent rise in like-for-like food sales, with volumes up five per cent. Its core convenience business was up by an impressive 3.8 per cent – ahead of the market – after investing £125m in lowering prices and improving its product range.
The Co-op opened 97 new stores and refitted a further 264, with plans to open another 100 stores and refit 150 this year.
According to Kantar, Co-op is the more frequently visited retailer in the country, despite ranking fifth in terms of market share, at 6.1 per cent.
Under chief executive Richard Pennycook, the group has already sold off parts of the business including its pharmacy and agriculture business, as part of efforts to repair its balance sheet that was left in tatters in 2013 when it reported a£2.5bn loss.
The firm warned that the current financial year would generate lower profits because of continued investment into the business, with profits for last year declining from £124m to £23m as a result.