Co-op warns over trading conditions

The Co-operative Group yesterday reported a 17 per cent rise in half-year profits, but warned trading conditions would remain challenging until at least the end of next year.

It posted underlying profits before payments to members of 260m, up from 221m a year earlier, with a 12.6 per cent leap in profits at its supermarket arm.

Sales at the grocery chain dropped 1 per cent, which it blamed on disruption amid the integration of the Somerfield business bought by the Co-op more than a year ago.

However, the group said like-for-like sales at the 2,500 stores

refitted since the acquisition rose 2.5 per cent.

Peter Marks, group chief executive of the Co-op and who lives in Bingley, said: "As anticipated, 2010 has been challenging so far, with tough economic conditions across our businesses.

"Looking ahead, however, we do not expect things to improve until late 2011 at the earliest."

The Co-op said it was on track with aims to complete the integration and rebranding of the Somerfield arm within two years of the deal – due to finish in the first quarter of 2011.

Trading profits at the division rose to 169.7m in the half-year to

July 3 from 19m a year earlier as the firm said it was leveraging its "new found scale" to drive better supplier terms.

Co-op now claims a 7.6 per cent share of the market after the

Somerfield transaction secured its place as the fifth largest supermarket chain.