- Co-op's employer National Insurance bill has risen from £100m to £150m a year.
- The group is cutting jobs as part of a wider plan to save £200m.
- Co-op reported a £92m loss in the first half, despite group sales rising 2.4 per cent.
Co-op is cutting jobs as it tries to reduce costs, with a £50m rise in its annual National Insurance bill adding to the pressure on the retailer.
The mutually owned group, which runs more than 2,300 food stores and around 800 funeral homes, said it is targeting £200m in savings as it deals with higher costs and the financial impact of last year's cyberattack.
Employer National Insurance costs have risen from around £100m to £150m a year. Interim chief executive Kate Allum described the tax increase as a surprise.
The higher bill comes alongside £78m of additional costs in the first half of the year, including the impact of increased employment taxes.
Co-op has not said how many jobs will be affected by its latest workforce changes. Allum said the business was reducing its overall level of employment in some areas, but described the process as largely being managed through natural turnover.
"Has it reduced our overall level of employment in certain areas? Yes, but not in a stark way, in a natural way," she said.
The group has also accelerated the rollout of electronic shelf-edge labels across all 2,300 of its food stores. The technology reduces the amount of staff time needed to change prices and is expected to help Co-op manage its workforce more efficiently.
Sales are recovering, but costs remain a problem
Co-op's financial results show a mixed picture.
Group sales increased 2.4 per cent in the first half of the year, while food sales rose 2.6 per cent. The company said shoppers are visiting stores more frequently and spending more, with promotions and its Aldi price match helping its food business in the second half.
Its online convenience operation and funeral business also performed strongly.
But Co-op still reported a £92m loss for the period to July 4, compared with a £75m loss in the same period last year.
The 2025 cyber attack remains a significant part of that picture. Co-op said the incident resulted in a £206m hit to revenue and an £80m impact on profit.
The company has also gone through a major management shake-up. Former chief executive Shirine Khoury-Haq stepped down in March, while chair Debbie White left in August. Managing director Matt Hood also departed earlier in the summer.
Allum, who took over as interim chief executive, has said the focus is now on listening to staff and improving communication following reports of problems with the group's workplace culture.
Co-op is also pursuing its planned takeover of Southern Co-op, which would add around 330,000 members and more than 300 food, funeral and Starbucks sites to the group.
The Competition and Markets Authority is examining the deal and could launch a deeper investigation if competition concerns cannot be resolved.
For now, Co-op's challenge is to cut costs without derailing the signs of recovery in its core retail business. The £200m savings programme is therefore likely to shape how its stores and workforce operate in the months ahead.
