Manchester-based Co-op Group revealed a new partnership with Amazon and an acceleration of robot deliveries as it announced its first-half 2021 revenue slipped to £5.6 billion from £5.8 billion in H1 of 2020 during the “unprecedented purchasing behaviour during the start of the pandemic.”
However, this year’s first half revenue from the UK’s biggest mutually-owned business was above the £5.4 billion achieved in 2019.
Co-op Group declared an underlying operating loss before tax for H1 of £15 million compared to a profit of £56 million at the same stage of 2020 but “generally consistent with 2019” when it made an underlying operating loss of £11 million.
The mutual said the H1 loss was “due to planned investment in our colleagues and our business, as well as significant costs, impacts on sales and profit erosion related to product availability issues and the ongoing effects of Covid.”
Net debt rose to £712 million from £550 million at the end of 2020 “excluding lease liability, reflecting increased investment.”
First-half capital expenditure was £161 million, including 53 store refits and 33 new stores.
In its outlook, Co-op Group warned: “The unplanned supply chain challenges and ongoing Covid costs will bring greater levels of uncertainty.
“This will in turn apply pressure on our prior expected level of profitability for year end.”
Meanwhile, Co-op Group announced plans to accelerate its ecommerce strategy with a new partnership with Amazon and an acceleration of robot deliveries.
The moves are part of an ambitious plan to more than double online sales from £70 million to £200 million by the end of the year.
“The partnership with Amazon gives Prime customers the ability to do their full Co-op grocery shop on Amazon.co.uk, with same-day delivery and two-hour scheduled time slots,” said the mutual.
“Initially launching in Glasgow – including surrounding areas such as Hamilton and Paisley – the initiative will be rolled out to other parts of the UK before the end of the year, with an ambition that it will become a nationwide service.”
Co-op Group confirmed the extension of its partnership with Starship Technologies, the delivery robot company launched by the co-founders of Skype, which allows the delivery of groceries in as little as 20 minutes.
The retailer will increase the number of autonomous vehicles operating and delivering Co-op groceries from 200 to 500 by the end of this year, bringing them to five new towns and cities, including Cambridgeshire, and extending the service into the North of England.
Andy Prendergast, national officer of the GMB union, said: “It’s really disappointing to see a company with a proud ethical heritage like Co-op teaming up with Amazon: a tax evading multinational with a horrifying health and safety record.
“Amazon has made billions throughout the pandemic and pays virtually no tax.
“Bosses won’t even recognise a union to improve the health and safety of their beleaguered workforce.”
Amazon responded: “At Amazon we are proud to offer excellent pay, benefits and opportunities for career growth, all while working in a safe, modern work environment.
“Our competitive wages start at between £10 and £11.10 per hour depending on location.
“We are proud that over 55,000 people have chosen Amazon as their employer in the UK and recommend Amazon as an excellent workplace to their family and friends.
“Our continued investment in the UK, £32 billion since 2010, helped contribute to a total UK tax contribution of £1.5 billion during 2020 – £492 million in direct taxes and £1.06 billion in indirect taxes.”