The Co-op slipped into the red for the first half of its financial year after its sales fell by over £200m.
The Manchester-headquartered group has reported a pre-tax loss of £33m for the six months to July 1, 2023, compared to a profit of £8m in the same period in 2022. The Co-op's revenue also fell from £5.6bn to £5.4bn.
On an underlying basis, the group's pre-tax losses were cut from £68m to £9m while its net debt was slashed from £731m to £123m. Its underlying EBITDA increased from £199m to £226m.
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The Co-op said that "despite a challenging economic backdrop" it "delivered a robust sales performance". It said the drop in revenue was driven by lower revenue in the food retail business, resulting from the impact of the petrol forecourt sale.
On its outlook, the group said it expects the "volatile external environment and turbulent economic headwinds, including inflationary pressures, to persist". However, it added it has "gone from a position of needing to improve on our financial performance, operational efficiency and internal ways of working, to running the business differently and setting the business up for success".
Chief executive Shirine Khoury-Haq said: "I am very proud of our success over the last six months, particularly given the prevailing economic and market conditions. This performance wouldn't have been possible had we not taken the decisions we did, as early as we did in 2022, when it came to better management of our members' money and running the business more efficiently.
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"While the economic environment remains challenging, we have again improved our underlying financial strength, significantly grown our membership base and delivered more for our members and their communities. We have done this while staying true to our Rochdale Principles, cooperating through partnerships and campaigning on topics which matter to our members most.
"We have invested heavily in supporting our members, communities, colleagues and customers through the cost-of-living crisis, and we will continue to do so.
"The business momentum established in the second half of the last financial year has carried through into the first six months of 2023 and has allowed us to significantly strengthen our membership offer and proposition – we have put our member-owners at the heart of what we do. We have listened to what they need, and we have not hesitated in our response.
"While there remains much for us to do, I'd like to thank all of our colleagues for their hard work in the first six months, which is delivering meaningful benefits for our members and their communities."
Chairman Allan Leighton added: "At a time when interest rates and borrowing costs have soared, we’ve managed, under Shirine's leadership, to reduce our net debt to an historically low level. While there is no room for complacency, there is room for confidence in our ability to plan ahead for growth in our Co-op and the impact we can have.
"It has been a pleasure to chair this amazing business over the past nine years. Whilst I won't be a member of the board into the future, I will certainly remain a Co-op member.
"The Co-op has always had a special place in my heart and that will continue after I’ve stood down early next year. The Co-op I leave is far stronger and far more member-centric than the one I inherited back in 2015. It is testimony to our amazing colleagues that we can look forward now with such renewed confidence and optimism."