Major Brit grocery store chain faces going bust with 300 shops vulnerable to closure
Southern Co-op warned it could be forced into administration after three years of financial losses, with the chain now seeking a merger with Co-op Group to protect jobs and stores
Southern Co-op has sounded the alarm (stock) (Image: Getty Images)
Thousands of retail workers are battling for their livelihoods as a major British supermarket chain cautioned it could fall into administration.
Southern Co-op has sounded the alarm that it stands on the edge of insolvency after three years of devastating financial losses. The regional powerhouse, which operates more than 300 food outlets, funeral parlours, and coffee shops throughout southern England, has informed its members that a tie-up with the national Co-op Group represents the sole route to survival.
Management broke the news in correspondence to members, disclosing the enterprise has been propped up by banks and suppliers as market conditions deteriorated over the past year.
Chief executive Ben Stimson and chair Janet Paraskeva delivered the alert on April 22 to outline the “full picture” of the company’s deteriorating condition.
They cautioned that should members reject the proposal to unite with the Co-op Group, the enterprise will “most likely” be pushed into administration. This would mean an outside specialist would be brought in to dispose of the remaining assets.
The retail chiefs acknowledged that the firm has been buckling under the pressure of three years of deficits and a “malicious cyberattack” that struck the Co-op Group last year. They disclosed that the business is confronting operational losses exceeding £20million in the coming financial year and that urgent actions, including halting hiring and cutting office premises, have failed to preserve sufficient funds.
In their correspondence to members, the executives were frank about the implications of a “no” vote in the forthcoming ballots. They declared that “Southern Co-op has made losses for the past three years” and “over the last year, trading has become more difficult, and we have relied on ongoing support from our banks and suppliers to continue operating.”
The circumstances are now dire because “that support cannot now be increased within the time available” and the company has not secured any alternative funding offers to maintain independent operations. The management team cautioned that “if the merger does not go ahead, the most likely outcome is that Southern Co-op will enter insolvency through administration,” noting that “this would put jobs at risk, lead to the loss of stores and negatively impact our suppliers.”
Should the merger receive approval, it would establish a colossal co-operative giant with turnover of approximately £11.5billion and almost 2,500 outlets nationwide. The board maintains the arrangement would deliver “immediate financial stability” and guarantee that shops stay open while safeguarding the employment of thousands of workers.
Members are now being pressed to rescue the enterprise by supporting the acquisition at extraordinary gatherings arranged for May 6 and May 21. The executives informed members that while they desired to remain independent, they conceded there was no other option.
They said: “It is not an easy decision, but it is the one that protects more jobs, more services, and more value for members than any other option available to us today.”
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