He said: “Our infrastructure and management systems have struggled to cope with the fast pace of our expansion in food retailing over recent years, and as a result we have not been able to respond to changing market conditions as rapidly as we expected.”
The group’s operating profits dropped for the six-months to July 2004, from £181 million to £135m, because of management’s decisions to rapidly expand and the failure of getting sufficient produce on its shelves. The number of Co-op stores has risen from 600 to 1.800 over the last four years from acquisitions.
Beaumont admitted that the Co-op did expect to feel some pain while integrating stores but that it had been greater than anticipated. He blamed the drop in performance of its stores on its own mistakes rather than on the success of the large supermarkets such as Tesco.
Beaumont added that profits would not improve in the final six months: “The second half of the year will remain challenging for food retail as it implements the measures needed to improve performance, and we do not expect the benefits of those changes to flow through until the next financial year.”
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