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UK Co-Operative Group profit hit by member reward scheme, insurance

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UK Co-Operative Group profit hit by member reward scheme, insurance

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LONDON (Reuters) – Britain’s Co-Operative Group, the mutually-owned supermarkets to funeral services group, reported a 48 percent fall in underlying first-half profit, reflecting the cost of a new member reward scheme and a decline in insurance profit. The UK’s biggest mutual group, which also operates legal services, travel and electrical goods retailing businesses, made an underlying pretax profit of 14 million pounds in the 26 weeks to July 1, down from 27 million pounds in the same period last year. Revenues were stable at 4.6 billion pounds, while debt was 680 million pounds. The Co-op nearly collapsed in 2013 after a 1.5 billion-pound funding “hole” was found in its banking operation. It has since recovered, aided by the shift in Britons’ grocery shopping habits towards more frequent trips to smaller convenience stores. The Co-op no longer has a stake in the bank. The Co-op’s strategy is to continue to invest in its businesses, while returning value to its members. It launched a new membership scheme in September last year which rewards both members and local communities. In the first half over half a million new members were recruited, taking active membership to 4.5 million across the UK. Some 29 million pounds was invested in member rewards, with 6 million pounds given to 4,000 local causes. “We can do all this because our businesses have continued to perform in the face of challenging markets,” said Group Chief Executive Steve Murrells, pointing to strong performances from food and funeralcare. Food like-for-like sales increased 3.5 percent, reflecting 14 consecutive quarters of growth, while funeralcare revenues were up 1.2 percent. However, insurance net earned premiums fell 21 percent to 164 million pounds, which the Co-op said was in line with its plans and due to the purchase of additional re-insurance to support its claims position.

(Reporting by James Davey; editing by Kate Holton)
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