An "investment in colleagues, businesses and supply chain impacts" forced profits to slump by £135m at the Co-op during its latest financial year, new figures have revealed.
The Manchester-headquartered group has reported underlying operating profits of £100m for 2021, down from the £235m it reported in 2020 and £173m in 2019.
Its pre-tax profits also fell to £57m from £127m in 2020 but were up from the £24m it posted in 2019.
READ MORE: Co-op chief executive Steve Murrells to step down as interim successor named
Total group revenue increased by £300m to £11.2bn compared to 2019 but was down by the same amount on 2020.
The Co-op said the "impact of significant supply chain disruption and system transformation in Food in H2 to support moves to an increasingly multichannel offer" contributed to the fall.
Net debt widened to £920m compared to £550m in 2020 and £695m in 2019.
The group said it reflected increased capital expenditure, investment in stock during supply chain disruption, negative cash flow timings and furlough repayment.
Most Read
It added that its net debt has "improved significantly" since the end of 2021.
Chairman Allan Leighton said: "The past year has been a challenging one for our Co-op, but we continued as planned with our investment strategy to strengthen our Co-op’s future state.
"I would like to thank our colleagues across the business whose passion and support continues to inspire and drive us forwards.
"We would all like to thank Steve Murrells for his outstanding contribution to our Co-op over the past 10 years and congratulate Shirine Khoury-Haq on her appointment.
"The economic headwinds look stark and will be tricky to navigate but through our continued planned strategic investments our Co-op is well placed to ride out the storm and prosper beyond."
The Co-op stated that £140m had been invested in its Food stores including opening 50 new locations, re-fitting 87, relocating 25 and extending 15.
A further £39m has been invested in "enhancing" its Food supply chain and opening a new depot.
Don’t miss
Interim chief executive Shirine Khoury-Haq added: "The Co-op is a business designed for the long term and that is the path we are on.
"The last year has seen us facing some significant challenges, including significant supply chain issues in the second half coming at the same time as our Food business transformation and increasing inflationary pressures.
"The difficult operating environment disproportionately impacted our Food business, given its focus on the community convenience market, with an operating model that is more reliant on flexibility in the supply chain.
"The Co-op remains uniquely positioned. We continue to be driven by our vision of co-operating for a fairer world and have a platform of businesses in the right markets to drive change, and get closer to our members, customers and communities.
"The significant investment we have made across our business in recent years now provides the basis for us to move forwards in a more efficient manner.
"As we look ahead, our focus must be on accelerating growth in our Food business through our four routes to market, whilst expanding our Life Services businesses, from Funeralcare to Insurance and Legal Services.
"We must also ensure our businesses are there for our members, customers, communities and suppliers who are experiencing the effects of the cost-of-living crisis, as we continuing to focus on our Honest Value range in Food and affordable services across Life Services.
"I am delighted to be leading this unique business and look forward to working with all our colleagues to take our Co-op to the next phase of its development."
On its outlook, the Co-op said it expects to face "continued challenges" during 2022, including the "final implementation of the business transformation in Food, current inflationary pressures and the economic uncertainty facing customers, members and colleagues".
It added: "The board remains confident in the strategy, with a focus on driving growth through capital-light routes to market and a priority to further reduce debt while continuing to deliver against the Co-op vision of co-operating for a fairer world."