The Co-op Group has returned to profit, despite the Co-op Bank posting losses of £262.4 million for 2014.
The group’s profits rose to £124 million, compared with a loss of £255 million the previous year.
The increase is the result of a three year plan to steady the business which came close to collapse in 2013 when a £1.5 million ‘black hole’ was found in the bank’s balance sheet.
The bank was rescued from closure by a group of investors headed by American hedge funds and, though its name has not changed, the Co-op has largely sold off its shareholding, retaining just 20%.
Group chief executive, Richard Pennycock, said the business had made good progress by reducing its costs from £175 million to £146 million and cutting its debts from £1.4 billion to £808 million.
The group sold off its pharmacy chain and farms to raise £216 million and Mr Pennycock said that without that move the group would ‘at best have broken even.’
Strong performances from the food and funerals divisions also contributed to the pot.
The Co-op is the UK’s fifth largest retailer with 2,800 stores. Last year it added 82 convenience stores and refurbished more than 700 of its bigger outlets. There are plans to open a further 100 stores this year.
Group chairman, Allan Leighton, said the business was thriving, despite intense competition from discount stores like Aldi and Lidl.
He said: “We can compete on more than price. We’re not a discounter, we’re very focused on the convenience sector and we’re doing pretty well in this area.
“We’re about fresh food and availability and we have fabulous staff in our stores that provide a service no-one else can.”
Summing up, Mr Pennycock declared: “The hard work of rebuilding the Co-operative Group for the next generation, and restoring it to its rightful place at the heart of communities up and down the UK, is now underway.”
The Co-op is the country’s largest mutually owned business with more than eight million members who share in the profits.
However, despite its improved performance, the group does not expect to be paying a dividend to its members until 2018.