Profit has fallen at the Co-op Group as it continues to invest in a three-year turnaround of the business.
The Co-op reported on Friday that its profit before tax for the first six months of the year more than halved to £17m, down from £36m in the same period of 2015.
Chief executive Richard Pennycook said that the drop in profit was “expected and planned” because of the restructuring programme, BBC News reported.
The group, which encompasses funerals, insurance and legal services as well as grocery stores, also reported a 2.2% rise in revenues, with like-for-like sales in its Food business up 3.1%.
Pennycook said in a statement:
“Revenues across the Group have grown and, in line with our strategy, profitability has fallen due to our major Rebuild investment, pay increases for our people and price cuts for our customers. We are able to invest for the long-term, strengthening the appeal of our products and services, because our business model allows us to pursue our unique approach, championing a better way of doing business for customers and communities.
“This long-term approach is evidenced by the continued reshaping of our Food store portfolio to support our own-brand, convenience-led strategy. This means we can, as necessary, forgo sales growth in order to ensure we have the right stores in the right places for our customers.”
As part of its three-year plan, the Co-op is returning to its iconic blue clover-leaf logo. Around half of the group’s store estate is expected to be rebranded before the end of 2017.
The group also announced on Friday a new membership offer, under which members will receive a 5% reward when they buy Co-op own-brand products and services, with a further 1% directly benefiting local causes. Members can choose the local cause they want to support from a list of three in each of the Co-op’s 1,500 communities across the UK.
Early results from a trial of the new scheme showed an increase in transaction numbers, turnover and the sales of the Co-op’s own-brand product range.
“By 2018 we expect to give back £100m a year to our members and the local causes they care most about,” said Co-op chairman Allan Leighton.