Co-op looks to funeral arm in hunt for turnaround from cyber-attack

Co-op reported a rise in revenue from its funeral services division, as the member-owned organization outlined steps to recover from a major cyber-attack that occurred last year. The interim chief executive, Kate Allum, stated that the company is facing a "year of two halves," with future growth anticipated later in the year. Co-op's IT systems were compromised in April 2022, losing the company £206 million in revenue and reducing profit by £80 million.

The company revealed that total sales increased by 2.4 percent in the six months leading up to July, surpassing the peak disruptions from the cyber-attack, though growth was achieved despite "soft markets with continued weak consumer confidence." The 'life services' arm of Co-op led the way, posting an underlying profit of £28 million, which was higher than the food business's £18 million.

Co-op's funeralcare revenue saw an eight percent increase, driven by a falling death rate, and the company's market share in the at-need funeral sector was at its highest since 2020, with sales rising by six percent. The group's legal services revenue increased by 15 percent, and insurance sales surged by 20 percent. However, Co-op faces ongoing challenges, with an £11 million jump in operating loss to £45 million due to increased investment in stores and discount pricing.

Former CEO Shirine Khoury-Haq stepped down in March to help the company move on from the cyber-attack. Allum noted that the first half of the year was marked by difficult markets and low consumer confidence, particularly for food retail, but that the company's second half is showing "biggest baskets and more transactions." In July, Co-op gained over 300,000 new members as part of its acquisition of Southern Co-op. The UK's competition watchdog has warned it may investigate the merger due to competition concerns.