Andy Bounds and Jonathan Eley
The Co-operative Group will give an above-inflation pay rise to 33,000 workers after its pre-tax profit rose by a third in the first half of the year.
Revenues at the mutual grew 7.6 per cent to £5.8bn as the pandemic lockdown forced more people to eat at home. Pre-tax profit jumped to £27m from £20m, after a £40m writedown for property assets and disposals.
The group, the UK’s sixth-largest grocer by market share, said it had agreed from next year to pay all workers at least the Real Living Wage, which is above the statutory minimum wage and adjusted every November.
Steve Murrells, chief executive, estimated that depending on this year’s increase it would raise hourly rates by about 50p for the lowest paid, who currently earn £10 in London and £9 elsewhere. It has 60,000 employees in total.
Mr Murrells said sales were about 10 per cent ahead year-on-year during the lockdown period. But he warned that it would be easier to “knit fog” than predict the impact of a second wave of coronavirus and the UK leaving the EU without a trade deal.
It would also need to drop prices in the coming weeks to compete with other supermarkets, and plans to overhaul its membership scheme to offer better discounts.
But he told the Financial Times the Manchester-based business was “in good shape” to face the future. Its grocery market share increased 0.5 percentage points to 7.1 per cent in the 12 weeks to June 14, a 20-year high. Grocery sales rose 5 per cent to £3.9bn. Revenues at Nisa, the wholesale business it bought in 2018, were up 14 per cent to £801m.
The extra income offset costs of £54m, including 7,000 additional staff, sick pay and personal protective equipment. Government support amounted to £33m. The Co-op expects to spend a further £43m this year.
Funeralcare revenue increased to £148m from £143m. There were 22 per cent more funerals but Covid-19 restrictions stopped the more expensive ones, reducing the average price.
Legal services revenue was flat at £19m.
The Co-op sold its insurance underwriting business for £185m to Markerstudy, with the sale expected to complete in the fourth quarter of 2020.
Net debt on June 30 was £555m, down from £695m at the end of 2019.
Profits were hit by a charge of £43m relating to deferred tax. Group loss after tax and discontinued items was £26m, compared with a £41m profit last time.
Allan Leighton, chairman, said the pandemic had highlighted inequality. “How we ‘build back better’ to create a fairer and kinder world has become central to public debate. As the UK’s biggest cooperatively owned business, we intend to be central to that conversation, showing how commerce and community wellbeing must develop in harmony for the good of us all.”
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