British retailer Co-op Group's loss widens on spending push

By Yamini Kalia

Sept 23 (Reuters) - British retailer-to-funerals group Co-op reported a wider first-half loss on Wednesday after stepping up spending on promotions and improvements to its stores, although it expects the investments will support a much stronger second half of 2026.

The member-owned retailer group, which traces its roots back to 1844, has been working to recover from a costly cyberattack last year, while at the same time facing weak consumer demand due to the Iran war and intense competition in the grocery sector.

"Customer confidence has been weak over the first half of the year, I think it still is," Co-op's interim chief executive Kate Allum told Reuters, adding that the group has stepped up marketing spending in funeral care and is matching the prices of discount grocer Aldi to attract customers.

Co-op CFO Rachel Izzard said it is largely shielded from higher energy costs as it has fully hedged its gas, electricity and diesel needs for the current fiscal year, while being more than two-thirds hedged for 2027 and over 40% hedged for 2028.

This would allow it to focus on performance, Izzard said.

Co-op, which runs more than 2,500 food stores and provides funeral, insurance and legal services, posted a £45 million ($60 million) underlying operating loss for the six months ended July 4, compared with a £32 million loss a year earlier.

Total group revenue rose 2.4% to £5.6 billion in the period, with its life services division leading the growth.

It is in the midst of a competition probe over its planned takeover of regional operator Southern Co-operative, which the UK's antitrust watchdog said this month could reduce competition in some markets.

($1 = 0.7514 pounds)

(Reporting by Yamini Kalia in Bengaluru; Editing by Subhranshu Sahu and Louise Heavens)