THE Coop has warned it could be forced to slash or suspend its “divvy” payments this year in the wake of “extremely challenging market conditions”.
The retailer said that a proposition allowing its board to determine if dividend rates should be reduced or if no dividend should be paid this year will be presented at its annual members meeting in May.
Chief executive Mark Cox explained that the scheme, which sees members build up an estimated reward every time they make a qualifying purchase, is “directly dependent on our financial performance”.
After the completion of each financial year it is decided whether there is enough profit for the dividend rewards to be paid into members’ share accounts, which does not happen until it has been recommended by the board and approved by members at the annual meeting.
However, Mr Cox said that – having considered the Coop’s financial performance in 2023 – it was “clear” that the amount paid out this year would need to be lower than the usual 4% rate, or potentially suspended.
He continued: “We wanted to be open and transparent with our members that this is the likely course of action.”
The Coop has cited a strain on global supply chains, increased raw ingredient prices, energy costs and “relentless” inflation as some of the factors impacting on its profitability.
Mr Cox revealed that price increases absorbed by the Coop last year had cost it around £2 million.
He said: “We are acutely aware of the financial stress our customers are experiencing in the current economic climate and we are investing in prices to mitigate the impact as much as we can. Our business has not been immune, however, to the consequences of these global issues and in particular rising costs.”
He continued: “The members’ dividend is a reward scheme that is directly dependent on our financial performance, and that has been affected by extremely challenging market conditions over the past few years. The board will put forward a proposal for the 2023 dividend at our annual members meeting and it will be for our members to vote whether they approve it.”
The announcement comes a few years after the Coop stopped its double dividend days initiative, which utilised stamps.
