Our CEO, Barry Wood, has recorded a video update on your Society’s interim trading performance for the first part of this financial year.
Watch the Video update HERE.
Extracts of his presentation are included below;
State of the Nation: The last financial year was more positive following a number of years full of challenges from COVID, Brexit and the cost of living crisis. It is fair to say that when reviewing the last financial year, the numbers indicated that the challenges were easing, but so far this year there has been no evidence of this being the reality.
The lack of a good summer has taken its toll on the food store’s performance as we will see shortly. In addition to the poor weather, there is still a level of caution from consumers over their personal finances, despite inflation falling and wages rising above inflation. The food retail industry continues to be extremely competitive, with the discounters continuing to grow market share as consumers look to stretch their disposable income further, whilst on demand shopping continues to grow at pace.
Financial Performance: At the end of the first half of the year, the Society’s gross takings have fallen by 3.20% on a like for like basis, with the food business accounting for the majority of the decrease. Looking at each business in turn;
- the food business has recorded a like for like decrease in gross takings of 4.50%
- the department store business experienced another very difficult first half and gross takings dropped by 1.10% year on year.
- the travel business has experienced a strong recovery after the challenging year in 2023 with gross takings growing by 15.40%.
- the funeral business has seen the death rate in our trading area fall by 9.04%, while the number of funerals conducted has fallen by 11%.
Gross Profit: The society’s income or gross profit has fallen year on year by 3.2%, with the level being directly impacted by the performance of the food and Funeral businesses in the first half. The management of gross profit continues to be an area that is heavily focussed on to ensure we both protect the gross profit through robust controls and constantly look for opportunities to grow the gross profit in all our businesses. Retail crime, in the form of shoplifting and “organised looting” continues to have a large impact on the Society with losses increasing by 41.1% year on year at the interim.
The Society’s cost to income ratio has risen to over 100% as the pressure on operating costs continues and trade gross takings and consequently gross profit falls. The Society continues to keep a very tight rein on operating costs to ensure that all increases are kept to a minimum and your Board reviews performance on a four-weekly basis. There is no evidence to suggest that in the short term, the pressure on operating costs will fall and with a potential increase in the National Living Wage of another 5% in April 2025, along with the annual increase in Business Rates, unless the Government announces a much-needed reform in the budget, will continue to make the management of operating costs challenging.
The Society’s Earning before Interest, Taxes, Depreciation and Amortization, fell substantially year on year to £164k, as a result of the challenges outlined earlier. As part of the three year planning process a review of the store portfolio has taken place and as a result the difficult decision was to dispose of the Society’s store in South Ockendon, which the Society has operated since 2010. At the Net profit or profit before distributions level the Society recorded a loss of £381k a position worse than last year.
Membership: The Society would like to take this opportunity to recognise the ongoing support of the investing members of the Society without whose investment the continued development of the Society would not be possible. While restrictions remain in place on the level of the investment that can be withdrawn in any one calendar year, this continues to be reviewed each month in light of Society performance and market conditions. Membership continues to be at the heart of your Co-operative Society and the Society has continued to help Members navigate the cost of living crisis by offering a variety of discounts to members when they trade with the society including 10% off of grocery spends in many stores and the figures indicate that these offers are being well received by members. In addition, in many stores, members can benefit from an increasing number of Member prices on specific products, further enhancing the Membership offer.
Business Development: Our core business is food, and it is this business that underpins the Society’s profitability so it is natural that this business will always stand out in terms of activity. During the first half the Society began the programme of food Store refurbishments after the pilot refit in Leigh on Sea in the second half of last year. The design incorporates a move away from the Co-operative food branding and moves to the use of the International Co-operative marque, that we currently utilise in our funeral business. By the end of October, the Society will have completed ten refits under the new brand, with several more to be completed by the end of the financial year. The performance of the refitted stores is far superior to the non-refitted stores and plans are being prepared to try and accelerate the programme during 2025, to complete as many stores as possible.
I trust Members have found the update useful and I look forward to updating you in person at the AGM in May 2025.