Chief executive Peter Marks said: “The Co-operative Group now has the critical mass necessary to deliver real change. With the successful integration behind us, we can embark on our ambitious three-year plan to invest £1.5bn to transform our retail estate under a single unified brand and build market share.”
News of the plan came as the group unveiled its financial results for the year to 12 January 2008.
Trading group sales (which exclude Co-operative Financial Services) were up by 18.8% to £6.3bn. But pre-tax profits were down by 46% to £195.5m due to one-off costs, including merger costs.
The Co-op said its food division had seen “another excellent year, driven by our continued focus on fundamentals and a determination to make the shopping experience better for our customers.”
Sales and profits in food were both boosted by the merger, with sales up 21% at £3.68bn and profits rising 50.5% to £139.2m.
Despite the poor summer weather, like-for-like sales were up by 4.6%, which the Co-op said was 1% above the industry average.
“We have now delivered eight consecutive quarters of like-for-like growth,” it added. “This growth was generated by increases in basket size and the number of transaction.”
The group stepped up its refit programme during the year, spending £86.3m on 379 refits and bringing some 25% of its 2,223-strong grocery retail estate into line with the new brand.
“We plan to complete the refurbishment and branding of the entire combined estate over the next two years, with 700 refits already planned for 2008,” the company added.
Refits have so far concentrated on convenience stores, which the Co-op said had delivered like-for-like sales growth of 13.7%.
This year, it has trialled a new format for its mid-sized supermarkets, which the group said was delivering “double-digit” sales growth. The pace of refits in mid-size supermarkets will now be stepped up.
The Co-operative’s food group launched 1,235 new products during the year, redeveloping and redesigning 1,500 own-label products, accounting for some 60% of own-label sales. Response from customers had been “overwhelmingly positive”.
Looking ahead, the group said: “Our markets remain intensely competitive and the outlook for the consumer economy remains uncertain.
“However, with the successful merger of the Cooperative Group and United Co-operatives, the new top management team in place and the integration process running ahead of schedule, we are confident we are well placed to make continued progress in the new financial year.
“In our core food business the momentum generated during 2007 has continued into 2008 with strong like-for-like sales in the first three months. We expect this to continue throughout the year, boosted by the rebranding programme, which is generating significant sales uplift.”
