The Co-op Group has confirmed that chief executive Shirine Khoury-Haq will step down after mounting pressure over concerns about workplace culture and a difficult year marked by losses and a devastating cyberattack.
Khoury-Haq, who has led the organization since 2022 and has been with the company for seven years, will be replaced by Kate Allum on an interim basis while the board begins the search for a permanent successor.
Her departure comes after reports of a “toxic culture” within senior management, as well as claims of declining morale, high-profile departures and operational challenges across the group.
The co-operative said it recorded an underlying pre-tax loss of £126m in the last financial year, compared to a profit of £45m the previous year. Revenue also fell 2.3 percent to £11 billion, due to trading disruptions and changing consumer behavior.
The group said the findings were heavily influenced by its response to a major cyberattack, which forced it to restrict systems to contain the threat. Although the measures were necessary, they had a significant economic impact.
The company estimates that the attack reduced sales by £285 million and profitability by £107 million, including £86 million in lost margin and £21 million in additional costs.
The food division, the largest part of the business, was particularly affected, with sales falling 2 percent to £7.25 billion. The disruption resulted in empty store shelves and changing shopping habits, which continued to impact performance even after systems were restored.
Market share also fell, falling to 5 percent in 12 weeks, compared to 5.3 percent the previous year, as the group lost ground to discounters and larger supermarket rivals.
In addition to financial pressures, the organization also faced scrutiny of its internal culture. A letter to board members, purportedly from senior staff, described an environment of “fear and alienation” that raised questions about leadership and decision-making at the top of the company.
The cooperative said it did not recognize these criticisms as representative of the entire organization and emphasized its cooperative structure and commitment to inclusive decision-making. However, the reports have exacerbated the challenges facing the group at a time of significant change.
Khoury-Haq said the timing of her departure reflects the next phase of the company’s transformation strategy.
“It has been an honor to lead our cooperative,” she said, adding that the company is now in a position to advance a program of stabilization and long-term reform that will extend beyond her planned term.
Their strategy focused on rebuilding the group’s financial position, reducing debt and modernizing its IT systems – issues that have been central to the cooperative’s operational challenges in recent years.
The company said it delivered a significant turnaround between 2022 and 2024, including a 95 percent reduction in debt and a 30 percent increase in profits over that period, before the recent setbacks.
The cooperative, which employs approximately 54,000 people and operates more than 2,300 grocery stores and 800 funeral homes, continues to face tough competition in its core markets.
Discounters such as Aldi and Lidl have expanded aggressively, while established rivals such as Tesco and Sainsbury’s have strengthened their positions, putting pressure on the co-op to differentiate its offering.
At the same time, the broader economic environment remains challenging as inflation, changing consumer behavior and geopolitical uncertainty impact demand.
Khoury-Haq acknowledged these headwinds, warning that “trade conditions remain difficult” and that external pressure is likely to continue.
The Board is now faced with the task of appointing a new Chief Executive able to lead the next phase of the Group’s recovery and transformation.
Group Chair Debbie White thanked Khoury-Haq for her leadership during a turbulent time, particularly for steering the organization through the cyberattack and broader restructuring efforts.
The change in leadership comes at a critical point for the cooperative. Restoring profitability, rebuilding trust internally and externally and adapting to a rapidly evolving retail landscape will be key going forward.
As the organization seeks to stabilize after a challenging year, the next phase of its strategy will be closely watched by both the market and its millions of members.
