Southern Co-op has announced an operating loss of £2.6m for the year to 26 January, down from a £752,000 profit the previous year.
Turnover fell slightly to £545m (previous year: £546m) and gross profit was £172m (£176m).
In the report, CEO Mark Smith said the cost-of-living crisis continued to impact shoppers’ confidence, while increases to the Living Wage and National Insurance mean “operating cost increases imposed from outside our business have been running well ahead of general inflation for some time now”.
He added: “Our response plan includes action on costs to ‘buy for less ’on third party operating expenses, more action to limit losses from retail crime and to further exploit our prior IT investments to work smarter. This cost action sits alongside focusing on plans for new incremental revenue streams that we can action at pace in 2025.
“I’m confident that we have a comprehensive plan to deal with the additional costs we will incur from this will enable us to absorb the substantial cost of the 2025 National Insurance and National Living Wage increases, and to still aim for a modest improvement in profitability for the year ahead.”
In terms of food sales, Smith said: “While food volumes were not where we wanted them to be, we have seen an improving volume trend on food sales compared with the prior year in the second half of 2024. We expect this to continue and to be enhanced further by the measures we are taking to build growth, going into 2025.”
However, the society did see an uptick in membership – growing 50% to more than 300,000. “Our significantly enhanced set of member promotions represents a substantial strategic investment,” said Smith. “This knowingly erodes sales profitability in the short term to achieve longer term growth in transactions and average basket values, through enhanced loyalty.”
Online quick commerce through partnerships like Uber Eats and Deliveroo rose by rates approaching 100%, he added.
But retail crime also continued to soar, hitting the bottom line. “In a single year, stock loss costs have increased by £2m taking the total cost of retail crime in 2024 to circa £8m pa,” warned Smith. “This is a significant, and unacceptable, deterioration.”
He said the society was continuing efforts to safeguard its colleagues and businesses through its dedicated Protecting Our People programme.
Growth continued at the society’s Welcome and Starbucks franchises, with 14 new openings between them, said Smith. This is in line with the society’s plan to grow revenues from its core businesses. Meanwhile investment continues in the funerals division, with the £1.9m scheme to replace the equipment in its flagship crematorium, the Oaks in Havant, delivered to time and budget.
The report says the society is running ahead of its climate targets and will announce a new upweighted net zero target.
It gave £675,000 to community causes in 2025
