A report by trade body Co-operatives UK said full-year sales at the department store retailer, which has 93,800 members, hit £10.9bn in March. This topped the Co-op which has 8.4 million members and turned in annual revenues of £10.8bn earlier this year.
The Co-op was overtaken by John Lewis, because the grocer-to-funerals group saw its stake in the Co-op Bank slashed to just 20 per cent following its emergency recapitalisation by hedge funds after its near collapse two years ago.
The bank nearly failed in 2013 and dragged the wider Co-operative group to a £2.5bn annual loss that year, after a £1.5bn hole was discovered in the lender’s balance sheet.
The Co-op’s annual revenue is made up of £10.2bn of gross sales and £600m discounted operations from its pharmacy business, which was sold for £620m last July to private banking-to-cement firm Bestway Group.
A John Lewis spokesman said: “The partnership’s model and constitution distinguishes us from traditional customer co-operatives. The success of the employee-owned model - when coupled with excellent management and customer service - means more and more business owners are now considering employee ownership.”
The whole of the worker-owned business sector saw its sales fall 2.8 per cent this year to £37bn, largely as a result of the crisis at the Co-op.
However, the report said the co-operative sector remained resilient despite the bad publicity it has attracted, with the number of members in the movement rising by 1.3 per cent to 14.9 million this year.
The survey added that the number of independent co-operatives also edged up 0.5 per cent to 6,796 outfits.
The largest area in the sector is retailing, which this year accounted for annual sales of £14.9bn - or 40 per cent of all employee-owned businesses. The next biggest area for worker run businesses is farming, which took in revenues of £6.2bn this year.
The report added that farming is also one of the fastest growing areas in the co-operative movement, growing sales from £4.8bn in 2010 to £6.2bn five years later.
Another fast growing areas is energy, which has seen sales jump from £18m to £260m over the same period. Health and social care has also risen from £40m to £60m over the last half decade.
Ed Mayo, secretary general of Co-operatives UK, said: “The Co-operative Group is coming out of a challenging period into one of renewal, and this of course has had an impact on the sector.
“Yet innovation and growth amongst co-operatives large and small, in everything from solar power to social care, have meant that the co-operative sector is growing and in good health.
“Because of its breadth, the co-operative sector is a resilient sector.”