The Co-operative Group has revealed the staggering financial toll of a sophisticated cyberattack that rocked the supermarket giant, with pre-tax profits plummeting by a devastating £117 million.
In a shocking disclosure to investors, the Manchester-based mutual reported profits crashing to just £28 million for the year ending January 6th, down dramatically from £145 million the previous year. This financial haemorrhage comes despite the group achieving record sales of £11.3 billion.
October Nightmare: Systems Compromised
The retail cooperative fell victim to a major cyber incident in October 2023 that forced the temporary shutdown of its automated payment services and caused significant disruption across its operations. While the group managed to restore most systems within 24 hours, the financial and operational fallout has been substantial.
Shirine Khoury-Haq, Chief Executive, confirmed the severity of the attack: "We experienced a significant cyber incident that required us to take immediate protective action. While we contained the breach effectively, the financial impact has been material to our annual results."
Food Business Defies Challenges
Despite the cybersecurity crisis, Co-op's food business demonstrated remarkable resilience, with like-for-like sales growing by 5.2% and total revenue reaching £7.1 billion. The group expanded its physical presence, opening 51 new stores and creating over 1,000 new jobs.
The convenience retailer also reported strong performance in its wholesale business, which supplies independent stores and franchise partners, with sales increasing by 6.7% to £1.4 billion.
Insurance and Legal Fallout Continues
While the company has insurance coverage for cyber incidents, the full financial impact extends beyond immediate recovery costs. The breach has triggered significant professional fees, system reinforcement expenses, and potential regulatory consequences.
The incident serves as a stark warning to UK retailers about the growing sophistication of cyber criminals targeting the retail sector. As businesses increasingly digitise their operations, the vulnerability to such attacks represents an ongoing threat to financial stability and customer trust.
Co-op has confirmed that enhanced cybersecurity measures have been implemented across all business units, with additional investment in threat detection and response capabilities to prevent future breaches.
