Co-op to Cut Jobs Amid Widening Losses, Citing Tax Hikes

The Co-op is set to axe jobs as it aims to save £200 million amid widening losses. The mutually-owned group, which operates over 2,300 food stores and 800 funeral homes across the UK, stated that cost-cutting measures are necessary to offset rising expenses, including tax increases implemented under the Labour government.

Interim chief executive Kate Allum declined to specify the number of staff who will be affected within the company's 54,000-strong workforce. The announcement of potential job losses comes as the Co-op reported losses of £92 million for the six months concluding July 4.

This figure follows a loss of £75 million in the same period last year, a period that was significantly impacted by a cyber attack. The company attributed its current financial struggles to weak consumer confidence and £78 million in additional costs, notably employment taxes such as the Labour government's increase in national insurance contributions.

The Co-op experienced a significant setback from a costly cyber attack in April of the previous year. More recently, the organization has faced allegations of a "toxic" work environment, leading to a management reshuffle. Former chief executive Shirine Khoury-Haq stepped down in March, followed by chairman Debbie White in August, and managing director Matt Hood departed earlier in the summer.

Despite these challenges, the Co-op reported a 2.4 percent increase in group-wide sales for the latest half-year period. Sales at its food stores rose by 2.6 percent, a modest gain compared to the previous year when the April 2025 hack resulted in a £206 million reduction in first-half revenues and an £80 million profit loss.

The group indicated that food sales are showing signs of recovery in the second half of the year, attributed to recent revival efforts, including price-matching initiatives against competitors like Aldi. Allum, who assumed leadership at the end of March, commented on the first half being marked by difficult market conditions and low consumer confidence, particularly impacting food retail.

"Against those conditions, we made decisions to drive trade – investing in promotions and investing in our stores – while also mitigating rising costs," Allum stated. She noted that trading is improving, with customers spending more and visiting food stores more frequently, but acknowledged that "more work to do."

Allum added that while conditions remain challenging, there are reasons for optimism across the company's portfolio, citing strong growth in areas such as online convenience shopping and funeral services. The Co-op anticipates a stronger performance in the second half of the year compared to the first, with expectations of sales growth and improved profitability.

The company is also addressing its internal culture following earlier reports of a "toxic" environment among senior management. "We’ve been listening and doing and explaining and making sure we’re communicating in the best way possible," Allum said.

Furthermore, the Co-op is proceeding with a planned takeover of smaller rival Southern Co-op. This acquisition would add approximately 330,000 members to its existing seven million members, along with around 300 food, funeral, and Starbucks coffeehouse locations. The Competition and Markets Authority is currently reviewing the deal, expressing concerns about potential reductions in local competition in certain areas.