Fresh food and price cuts help Co-op's Christmas

THE Co-op's focus on cutting prices and selling fresh food from local stores hit the spot over Christmas.

Like for like sales at Britain's fifth biggest retailer, without the effect of new store space, increased 5.3 per cent in the 12 weeks to 2 January, with the figure five per cent higher in the final three weeks.

Total sales were up 66 per cent because of the acquisition of Somerfield last year.

Co-op, which has 3,000 stores after buying Somerfield, put together a £200 million package of cuts and promotions. It said Christmas advertising and the overhaul of its brand helped it to attract more customers.

Chief executive Peter Marks described trading conditions as competitive but said the Co-op's chain of small stores gave it an edge at a time of rising fuel prices and winter weather.

"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 Co-op expected economic pressures to continue until the end of the year or the first half of 2011.

Co-op said its customers seemed determined to make the most of Christmas despite the recession. Sales of Champagne were up 83 per cent, with demand strongest for its £12 Veuve Monnier Brut Champagne. There were also strong performances in meat and poultry, chilled foods, beers and confectionery.

The business offered its dividend payout to Somerfield customers for the first time since its £1.6 billion takeover. It also offered a triple dividend on certain lines, equivalent to savings of 6p in the pound if taken in cash.

All supermarkets are expected to have done well over Christmas. Tesco, by far the biggest player, will unveil its numbers tomorrow.