The Co-operative has suffered a fall in like-for-like food sales amid “extremely fierce” competition but made a pledge to increase its home grown fresh offer.
The supermarket experienced a 2.5 per cent drop in same-store food sales but was bolstered by profits elsewhere in the business.
Its Co-operative Farms business is to increase its percentage of Co-operative UK grown fresh food in stores from 6.5 per cent to 25 per cent by 2015
It said profits rose to £545.7 million in 2010 - a 48 per cent rise in underlying profits - and announced that dividend payments to its 6.5 million members would increase by 55 per cent to £77.4 million.
Overall food sales were up 4.8 per cent to £7.5 billion as the group benefited from integrating the Somerfield chain while a 24 per cent sales rise in its financial services business boosted performance.
Its financial services arm, which includes Smile internet bank, reported a 24 per cent rise in sales to £2.5bn following the acquisition of the Britannia building society.
The group warned the outlook would remain challenging into 2012 as the economic downturn is deeper than it expected.
Group ceo Peter Marks said: “Looking ahead, we had hoped to see signs of economic recovery by the start of 2011, but the downturn is clearly biting deeper than we had expected. We now anticipate challenging trading conditions through to the end of this year and into 2012.
“With consumers feeling the squeeze on their spending, I know that all of our businesses will have to fight for their market share. That means we must make even greater efforts to ensure we are responding to the needs of our members and customers and are giving them good reasons to continue to trade with us.
He added: “But, despite the difficult economic environment I am confident that we are well placed to meet the challenge. During 2011 we will still be a business in transition, however, all the work done over the past three years means we are in good shape to continue to weather the downturn and make the most of opportunities when the economic situation improves.”
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