The Co-operative Group’s CEO Peter Marks has expressed deep concern over market conditions in reporting a 10 per cent drop in profits.
Marks said conditions were the worst he had experience in his 40 years in the retail industry as The Co-op reported a 10 per cent decline in underlying operating profits to £275.1 million in the 26 weeks to 2 July.
Despite a good performance in its financial division, the group recorded a five per cent drop in revenues and 21 per cent fall in profits at its foods arm, which includes the Somerfield chain.
Peter Marks, group chief executive, said: "At the full year we warned that the downturn was biting deeper than anyone had expected and predicted that challenging trading conditions would continue into 2012.
"This has clearly proved to be the case. Indeed, it is the worst I have seen in over 40 years of retailing and, against this backdrop, the results we are announcing today are in line with our expectations."
The food business has recorded sales of £3.7 billion in the half year, down from £3.9 billion last year, and underlying operating profits of £135.4 million, down from £171.6 million.
"Intense competition from all major retailers, greatly diminished customer confidence and the start of the Government's austerity cuts have all had a part to play," the group said.
The Co-op opened two new distribution centres - in Andover, Hampshire, and Newhouse, North Lanarkshire - for its foods division in the period and two more, worth £110 million, are in the pipeline.
The group has refitted 244 food stores and opened eight new stores in the period. It plans to refit 259 and open 30 in the second half of the year.
The company has committed to investing £2 billion in the business over three years, with £280 million spent in the period.
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