Profits up 48% but Co-op cautious over recovery

THE Co-operative Group, Britain's biggest mutual retailer, does not expect a recovery in consumer spending until next year, it warned yesterday, as it posted a jump in annual profit thanks to acquisitions.

Chief executive Peter Marks said: "We had hoped to see signs of economic recovery by the start of 2011, but the downturn is clearly biting deeper than we had expected. We now anticipate challenging trading conditions through to the end of this year and into 2012."

The Co-op, whose businesses span food stores, financial products, pharmacies and funeral services, reported a 48 per cent rise in underlying profits, despite a 2.5 per cent drop in same-store food sales at its supermarket arm as it battled "extremely fierce" competition.

The mutual said profits rose to 545.7 million in 2010 and announced that dividend payments to its 6.5 million members would increase by 55 per cent to 77.4m.

Overall food sales were up 4.8 per cent to 7.5 billion as the group benefited from integrating the Somerfield supermarket chain, but like-for-like sales declined as it struggled to compete with larger rivals.