Manchester-based Co-op Group said on Thursday its 2021 revenue was up £300 million against pre-pandemic levels to £11.2 billion but down slightly year-on-year from £11.5 billion in 2020.

Co-op Group said the slight decline reflected “unprecedented Covid-related sales in 2020 … and impact of significant supply chain disruption and system transformation in food in H2 to support moves to an increasingly multichannel offer.”

The mutually-owned business said its net debt soared to £920 million, excluding lease liabilities, up from £695 million in 2019 and £550 million in 2020, “reflecting various factors, including increased capital expenditure, investment in stock during supply chain disruption, negative cash flow timings and furlough repayment.”

It said net debt “has improved significantly since year end.”

Underlying operating profit fell to £100 million (2019: £173m, 2020: £235m) “reflecting increased investment in colleagues and businesses and H2 supply chain impacts.”

Looking ahead, the Co-op said it “expects to face continued challenges during the year, including the final implementation of the business transformation in food, current inflationary pressures and the economic uncertainty facing customers, members and colleagues.”

Interim chief executive officer Shirine Khoury-Haq, who will permanently replace Steve Murrells in the top job next month, told the PA news agency that “price rises are a given” as higher supply costs add to inflationary pressures.

“These (supply) issues are not going to go away any time and it is very multi-faceted so we need to work hard to protect our customers and suppliers,” she said.

“The supply side of things is still a huge challenge globally.

“For example, flooding in Spain has impacted green vegetables like broccoli and lettuce so we have to switch those out in some products.

“Similarly, the situation in Ukraine has impacted sunflower oil and that is being replaced by rapeseed oil, so we recognise that things are still changing all the time.”

Co-op Group reported more new members recruited than the previous two years, with membership now up to 517,000 compared to 470,000 in 2019 and 445,000 in 2020, with 39% aged 35 and under.

About £21 million was shared with members through member rewards and £10 million in total saved by members by redeeming digital offers.