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The Co-operative Group, one of Britain’s largest member-owned retailers, swung deeper into the red for the year to January 3, 2026, as the lingering financial fallout from a major cyberattack combined with rising staffing costs and a deliberate push to invest in stores and colleagues to widen the group’s losses considerably. The retailer reported an underlying loss before tax of £126 million, a sharp reversal from the £45 million profit it posted a year earlier, alongside total revenue that fell 2.3 percent year over year to £11.03 billion.
The cyberattack that struck the group in April 2025 remains the single largest factor behind the widened loss. Co-op has estimated the incident had a direct £285 million impact on revenue and a £107 million hit to overall profitability, costs stemming from the company’s decision to deliberately restrict its own systems in order to contain the threat once the breach was discovered. The attack, attributed to the hacking collective known as Scattered Spider, also resulted in the theft of personal data belonging to all 6.5 million of Co-op’s member customers, an outcome the group’s leadership described at the time as leaving them incredibly sorry for the impact on those affected. The incident formed part of a broader wave of attacks that also hit rival retailers Marks & Spencer and Harrods around the same period, with UK authorities later arresting four suspects, including three teenagers, in connection with the campaign.
Beyond the direct cyberattack costs, Co-op said the wider loss also reflected significant cost headwinds totaling roughly £150 million, including £47 million in extra expenses tied to a rise in employer National Insurance contributions and new packaging taxes that took effect during the reporting period. The company said it expected the ongoing conflict involving Iran to weigh further on consumer confidence heading into the current year, adding another layer of external pressure on top of the costs already absorbed from the cyberattack and rising employment expenses.
Even accounting for those pressures, Co-op’s underlying operating loss came in at £35 million for the year, a significant swing from the £131 million operating profit the group posted the previous year. Net debt excluding lease liabilities climbed sharply as well, rising to £317 million from just £55 million, giving a clear sense of how much financial strain the combination of the cyberattack and broader cost pressures placed on the group’s balance sheet over the twelve-month period.
Not every part of the business struggled equally. Co-op highlighted quick commerce, its rapid convenience delivery service, as a genuine bright spot, with that segment of the business growing 15 percent over the year. The group also expanded its franchise store network with 11 new openings, bringing the total to 65 locations, and reported strong growth in its overall membership base, with active members climbing 17 percent to 7.2 million, putting the group on a clear trajectory toward its stated target of reaching 10 million active members by 2030. Outgoing chief executive Shirine Khoury-Haq acknowledged the difficult trading environment directly, saying that while conditions remained challenging and the geopolitical landscape was adding further instability, the group had genuine reasons for optimism heading forward.
The results also marked a significant leadership transition for Co-op. Khoury-Haq stepped down from the chief executive role after seven years at the helm, with Kate Allum, previously a member-nominated director on the group’s board, appointed interim CEO effective March 30. Khoury-Haq framed the timing of her departure around the completion of the group’s initial post-cyberattack recovery phase, saying the organization was now positioned to move into a broader strategy of stabilization and transformation that would extend beyond the timeframe she had originally planned for her own tenure, making it the right moment to hand leadership to someone who could commit to carrying that strategy through.
Under Allum’s interim leadership, Co-op has set out an ambitious recovery target, aiming for a 35 percent increase in underlying profit during 2026 even as it continues to navigate volatile market conditions and what it describes as persistently weak consumer confidence. Central to that recovery plan is a target of reducing annual operating costs by £200 million during 2026, a cost-rationalization program the group has said is intended to actively arrest losses and stabilize its core balance sheet going forward. Industry analysts have noted that Co-op members will be looking primarily for hard evidence that this cost-cutting program is genuinely taking hold, rather than remaining an aspirational target disconnected from the group’s actual financial trajectory.
Alongside the internal cost-cutting push, Co-op is simultaneously pursuing external growth through a planned takeover of smaller rival Southern Co-op, a deal that would add approximately 330,000 members to Co-op’s existing base of roughly seven million at the time the acquisition was announced, along with around 300 additional food, funeral and Starbucks coffeehouse sites. Pursuing that kind of expansion at the same time the group is working to cut £200 million in annual costs illustrates the balancing act facing Co-op’s new leadership: growing the business’s footprint and membership base while simultaneously working to repair a balance sheet that absorbed one of the most costly cyberattacks in recent UK retail history.
Whether Co-op’s combination of aggressive cost-cutting, continued membership growth and strategic expansion through the Southern Co-op takeover proves sufficient to deliver the 35 percent underlying profit improvement management has targeted for 2026 will likely become clearer as the group reports further results throughout the year. Continuing coverage of how UK retailers are navigating cyberattack recovery and rising operating costs is available on Business Tech. Additional detail on Co-op’s financial results is available through the company’s official site, and further reporting on the results can be found through Sharecast’s coverage of the announcement.
