Co-op sales rise after price-cut campaign

The UK's fifth biggest food retailer, which now has 3,000 stores after buying Somerfield last year, unveiled a 200 million package of cuts and promotions over the festive period, including its first triple dividend.

Manchester-based Co-op added that the recent overhaul of its brand and a significant increase in seasonal advertising helped it to attract more customers to both its convenience and larger store formats.

Like-for-like sales - including VAT but excluding fuel - increased by 4.8% in the 12 weeks to January 2, with the figure 5% higher in the final three weeks. Total sales were up by 66% due to the acquisition of Somerfield.

Bradford-based chief executive Peter Marks described trading conditions as competitive but said the presence of Co-op stores within local communities gave the chain an edge at a time of rising fuel prices and extreme weather conditions.

"These results represent another strong trading performance from our food business in an increasingly competitive market and a difficult economic climate," he said.

Mr Marks said the chain expected the current economic pressures to continue until the end of 2010 or the first half of 2011.

Despite the recession, the Co-op said its customers were determined to make the most of Christmas. Sales of Champagne were up by 83%, with demand strongest for its Veuve Monnier Brut Champagne, priced at 12.

There were also strong performances in meat and poultry, chilled foods, beers and confectionery, the Co-op added.

The trading period saw the business offer its famous "divi" - or dividend payout - to Somerfield customers for the first time since its 1.6 billion takeover.

And the "triple dividend" payout was also offered on certain lines - equivalent to savings of 6p in the pound if the dividend is taken in cash.