Profits at the Co-operative Group have fallen by a third after its food stores suffered amid “fierce” competition from supermarkets and its banking arm was hit by the recession.
The group’s banking division, which has agreed to buy 632 branches from Lloyds, saw operating profits fall 67.9 per cent to £36.9 million.
Its 3,000-strong food store division was also hurt by the wet weather as people drove to supermarkets rather than walk to local shops.
Underlying sales in the division fell 1.2 per cent in the 26 weeks to 30 June, while operating profits dropped 16 per cent to £119m.
As a result, overall group profits fell 34 per cent to £174m.
Chief executive Peter Marks, who earlier this month announced his retirement after 45 years in the co-operative movement, said the Co-op stood by plans to pump £2 billion into the business over the next three years.
He said: “It is in times like these when our ownership model as a mutual really comes into its own.
“We have been able to continue to invest for the long-term development of all our businesses and to protect our customers even though we, like all businesses, have felt the impact of the tough headwinds of the unrelenting consumer downturn.”