The Co-operative Group is expected to generate losses of more than £2bn and is considering selling its farming operations and its pharmacies.
The Co-op group chief executive Euan Sutherland is set to reveal to members of its regional boards on Saturday that the business’ farming arm, which includes 15 farms, will be sold.
The arable farms supply a small part of The Co-op’s offer and produce cereal for bakers.
Sutherland is also expected to be mulling a sale of its 750-store pharmacy chain. It generated sales of £764m in 2012 but it has come under pressure because of Government prescription reimbursements.
The Co-op said today: “As part of the wider strategic review of all of its businesses, The Co-operative Group has decided that its farms are non-core and has started a process that is expected to lead to a sale of the business. In addition, it is exploring options for the future of the Pharmacy business; this could include the sale in whole or part of the business.”
Sources say the Co-op’s banking arm is to blame for the £2bn-plus losses to be announced on March 26 – the worst in its history – combined with the reduction in the value of the stores and goodwill it acquired with the Somerfield takeover of 2009.
In the next four years, the Co-op Group aims to cut costs by £500m. It has already found savings of £100m.
Sutherland will find more savings by cutting jobs, targeting between 4,000 and 5,000 job cuts by 2017, according to the BBC. These are expected to impact head office and support positions but a specific number hasn’t yet been decided.
It comes after Sutherland last week admitted to Retail Week that job cuts would be key to stripping out costs.
One source said: “We worry that the board is exaggerating the scale of the crisis, including losses, to turn the Co-op into much more of a conventional business, and move it away from its democratic and ethical roots.”
Sutherland is set to unveil the full Co-op restructure around the time of its annual meeting on May 17.
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