April 24, 2020 / 12:53 PM / a month ago

Britain's Co-op warns of $340 million hit from coronavirus crisis

FILE PHOTO: Branding is seen outside a Co-op supermarket in London, Britain, September 14, 2018. REUTERS/Hannah McKay

LONDON (Reuters) - Britain’s Co-operative (42TE.L), the supermarkets to funerals group, warned on Friday additional costs associated with the coronavirus crisis could be up to 275 million pounds ($340 million).

The owner of the country’s sixth largest supermarket chain, said the extra costs would in part be offset by increased food sales and the business rates holiday from the government.

Estimated in a range of 200-275 million pounds, the additional costs include increases in payroll, logistics, store expenses, investment in staff safety and the impact of social distancing measures on the type and size of funerals the Co-op carries out.

Earlier this month, supermarket leader Tesco (TSCO.L) estimated a hit of up to 925 million pounds from the costs of dealing with the pandemic. No. 2 player Sainsbury’s (SBRY.L) is due to report results next Thursday.

The Co-op, owned by its members, operates over 2,600 food stores, more than 1,000 funeral homes, and provides products to over 5,100 other stores. Employing over 63,000, it also has interests in insurance, legal services and health.

“Against the backdrop of COVID-19 we will review the strategy we had embedded across our businesses, aligning commercial and community objectives,” said chief executive Steve Murrells.

For the year to Jan. 4, 2020, its total revenues grew 7% to 10.9 billion pounds, driven by a continued strong performance from its food business, which has delivered six years of like-for-like growth. Headline underlying pretax profit rose 50% to 50 million pounds.

The Co-op nearly collapsed in 2013 after a 1.5 billion-pound funding “hole” was found in its banking operation. It has since recovered strongly, aided by the shift in Britons’ grocery shopping habits toward more frequent trips to smaller convenience stores - the mainstay of its business. It no longer has a stake in the bank.

Reporting by James Davey; Editing by Mark Potter

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