The Co-operative Group has named Richard Pennycook, the interim boss who had previously counted himself out of the running for the top job, as new chief executive as it attempts to rebuild its reputation after a series of damaging financial crises.
Mr Pennycook, who is a former finance director of Wm Morrison Supermarkets, stepped into the breach after the surprise resignation of Euan
Sutherland in March and has spent the past six months steadying the ship. His appointment was announced alongside the Co-op’s first-half results, which showed that it had posted a small profit against a heavy loss the previous year.
The 50-year-old said he changed his mind on taking the top job after new governance reforms were introduced at an extraordinary meeting over the weekend. “The key element was the governance vote. That unlocked the prospect of running the organisation permanently. I have a very strong view that this is a national institution and a unique organisation,” he said.
Ursula Lidbetter, the outgoing chairwoman of the Co-op, said that Mr Pennycook’s “deep experience of turnarounds” made him ideal to usher in a period of “certainty” at the mutual, and that he had enjoyed a successful interim stint at the helm. “He has won the hearts and minds of members,” she said.
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Mr Pennycook has earned £1.3 million as interim chief executive. A Co-op spokesman said that his remuneration had not been fully decided. Executive compensation is a thorny issue for the Co-op after Mr Sutherland’s exit in the wake of a boardroom revolt over his proposed £3.5 million pay packet.
The Co-op made a £116 million profit in the six months to June compared with a £1 billion loss a year ago as the organisation was obliged to take a huge write-off on the Co-op Bank, which has since been hived off into a separate business. It had debt of £1.4 billion but expects to have cut its borrowings, including short-term bank debt, to £1 billion by the end of the year as it receives the proceeds of its disposal programme.
It has bolstered its balance sheet by selling its farms, pharmacies and cash-handling division for £910 million, which Mr Pennycook said was more than it had expected. The mutual’s new chief executive said the worst was behind it after a turbulent few years. The Co-op has been rocked by a financial abyss at the Co-op Bank, a sex scandal surrounding the bank’s former chairman, a downturn in trading at its supermarkets and an internal battle over governance, which was settled on Saturday.
Interim results from the organisation showed a 1 per cent increase in like-for-like sales at the Co-op’s supermarkets, although profits from food slipped to £107 million from £117 million after the sale of non-core stores. It will continue to offload its larger supermarkets.