East of England Co-op: chain celebrates rise in profits - but store closures ‘could be on cards’
PUBLISHED: 06:00 28 April 2015
An East Anglian store chain is celebrating a 3% rise in profits, but warned store closures could be on the cards this year as it continues to battle tough trading conditions.
The East of England Co-op saw second consecutive year of increased turnover and profits before tax and distributions, with sales up by £0.2million for the year from January 2014 to January 2015.
This was against a challenging backdrop of falling food store sales, which dropped by 1.3% overall, with a slide in sales seen at its larger food outlets. These were offset by successes in other areas, including the growing success of its Sources Locally initiative.
The Ipswich-based retailer, which has more than 200 trading outlets across Norfolk, Essex and Suffolk, announced a “healthy” turnover of £342.1m for the year 2014/2015, with £221.6m in members’ funds and £18.6m cash in the bank.
Profits before tax and distributions increased to £6.9m, compared to £6.7m in 2014.
Despite unprecedented change and competition in the food retail market, all of the East of England Co-op’s businesses, apart from the retailer’s general food operations, saw an increase in turnover.
Its petrol forecourt sales rose by 5% due to a “competitive” fuel pricing strategy.
Meanwhile, its Sourced Locally a local food initiative, which involves 140 food producers across East Anglia, saw an impressive 22% uplift in sales.
The retailer has also supported 180 community projects in the last year and made donations of over £290,000, as well as pledging to become a dementia-friendly retailer.
“Our good results are due to the hard work of our colleagues, who truly are our greatest asset,” said East of England Co-operative Society president Sally Chicken.
But she warned: “Over the next year we will continue to face a tough competitive environment, but our plan to address the challenges within our food retail business includes building on the success of our award-winning Sourced Locally initiative.
“Sadly, there is a possibility of store closures in 2015. We would make any such proposals with a heavy heart, and always with the future greater good of your Society in mind.”
Finance and technology boss Doug Field said the retailer continued to face a “highly challenging” marketplace, especially across its food businesses. This was down to changing shopping habits and increased competition from discount stores, and made the overall increase in sales and profits “an even more significant achievement”.
He explained there was always an ongoing review of stores and pointed out the chain was opening new ones, including two launched recently in Norwich and a further two due to be opened at Handford Road, Ipswich, and at Coggeshall. Large stores were suffering more than smaller ones, but there were individual circumstances attached to each outlet, including in towns such as Ipswich where “aggressive growth” of rival convenience stores putting pressure on sales, It was very rare to be able to grow sales at a store already in situ, although the chain had some good points of difference, he said.
“We have got to continue to ensure we have got the right stores in the right place,” he said. Store closures couldn’t be ruled out, he added, and could happen on a small scale, although it was possible some loss-making stores could be used for other purposes. Outside of food retail, the society runs a wide range of businesses, including funeral offices, pharmacies, post offices, opticians, petrol forecourts and investment property. Where stores were earmarked for closure, the society, because of its community-based ethos, would carry out a consultation first.
“We are going to address those challenges and we are already seeing growth in our small stores,” he said. They would continue to invest and innovate, and were confident they were doing “the right things” for the future, he added.
“It’s going to be a difficult period for the food retail business,” he predicted.