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‘Toughest trading in 40 years’ leaves Co-op 12% down

By Ian Taylor  |  Aug 26, 2011 08:00AM GMT

'Toughest trading in 40 years' leaves Co-op 12% down

The Co-operative Group reported the worst retail trading conditions “in 40 years” as it recorded a 12% drop in underlying profits for the first half of this year.

Co-op group chief executive Peter Marks said: “We do not see signs of any real improvement in the economy and are planning accordingly.”

The group reported an underlying profit of £230 million for the six months. The business division that includes The Co-operative Travel contributed an underlying operating profit of £70 million.

However, the group gave no figures on the performance of its travel division which will merge with Thomas Cook and the Midlands Co-operative over the next month followingCompetition Commission clearance.

The Co-operative Travel made an operating profit of just £100,000 last year. It is part of a business division that includes the Co-operative Pharmacy, Funeralcare, Legal Services, car dealerships and clothing.

In a statement, the group said: “The UK and the world economy remain in a highly fragile state. Our customers are feeling the squeeze and, inevitably, we are seeing an impact on sales. The economic environment is particularly challenging for those businesses that rely on ever-tightening discretionary spend.”

Marks said: “We warned that the downturn was biting deeper than anyone had expected and predicted challenging trading conditions would continue into 2012. This has clearly proved to be the case. Indeed, it is the worst I have seen in 40 years of retailing.”

The deal with Thomas Cook guarantees the Co-operative Group a minimum dividend from the travel retail business of £10 million a year for the next four years, with a subsequent option for either partner to buy out the other.

Union ‘not consulted’ about Cook Co-op merger

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Union ‘not consulted’ about Cook Co-op merger

Aug 19, 2011 07:00AM GMT

The trade union representing staff at the Co-operative Group has expressed dismay at the company’s failure to consult it ahead of receiving Competition Commission clearance for the travel retail merger with Thomas Cook.

The Commission gave a final go-head to the deal to merge The Co-operative Travel, Midlands Co-operative and Thomas Cook retail division on Tuesday, after announcing provisional clearance on July 21.

The deal will see the creation of a new joint venture with more than 1,200 shops and in excess of 9,000 staff. It will be run and majority-owned by Thomas Cook, with most of the 9,000 staff from Cook and the Co-ops required to transfer employment.

Shop workers’ union USDAW said it had no warning that the announcement was imminent.

USDAW national officer Sharon Ainsworth said: “We have concerns about whether stores will have to shut and we are not happy about the fact we don’t know more.

“The Co-op did not consult us and that is unusual. I deal with the company day to day and the unions were not told.”

The Co-operative Travel head office employees at Burslem, Stoke-on-Trent, and in Manchester will face a choice between a transfer within the Co-op, a move to Thomas Cook headquarters in Peterborough or redundancy.

Ainsworth said: “Everything has been on hold since the merger was referred to the Competition Commission. There have been no talks. We had expected a decision in October, so the announcement was quite a shock.

She said the Co-operative Group had now agreed to a meeting with union officials.

Both the Co-operative Group and Thomas Cook have declined to give details of the joint venture and staff-transfer process ahead of consulting staff, but the process is likely to begin within six weeks.

Thomas Cook staff are represented by a separate union – the transport union TSSA.