Co-op announces drop in profits in tough times

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Profits at the Co-operative Group fell by a third after its food stores suffered amid what it called fierce competition from supermarkets and its banking arm was hit by the recession.

Most, but not all, Co-op food shops in Portsmouth are run by The Southern Co-operative, not the Co-operative Group, although the group operates funeral services and travel agents in the city.

The group, which last year admitted it was battling the toughest conditions for 40 years, said 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 June 30, while operating profits dropped 16 per cent to £119m.

Its banking division, which has agreed to buy 632 branches from Lloyds, also felt the pain, with operating profits down 67.9 per cent to £36.9m as it bore the brunt of the UK’s double-dip recession. With its two biggest divisions suffering, overall group profits fell 34 per cent to £174m.

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