The Co-operative Group, Britain’s largest mutually-owned retailer and the country’s fifth-largest food retailer, today reported a 17 per cent rise in first-half profits to £229 million, buoyed by its acquisition of Somerfield and strong comparable sales growth at its convenience food stores.

Like-for-like food sales grew by a market-leading 7.3 per cent, excluding fuel and VAT. Tesco recently reported a rise in like-for-like sales over the same period of 3.7 per cent, with Sainsbury’s up 5.7 per cent.

Peter Marks, Co-op chief executive, said that the group’s concentration on “value and values” rather than on price alone had helped it win market share.

He said that sales of the value range, which was relaunched and extended under the “Co-operative Simply Value” label in March, were up almost 80 per cent year-on-year, while Fairtrade products experienced growth of 35 per cent.

He also said that the “Blowing in the Wind” television campaign in February helped bring back customers signalling that the Co-operative Group “was once more a force to be reckoned with”.

The chain has sold 200 of the 400 Somerfield stores it bought in February to meet competition rules and has so far converted 29 to Co-op outlet.

The group’s funerals and electricals business also saw “robust” performances, while Co-op travel and pharmacy performed well in markets that are “extremely challenging”, according to Mr Marks.

He added: “In spite of our recent success, it would be naive to think that we are immune to the recession. That said we are pleased with our half-year performance, the second half has started well and we look ahead to the future with renewed confidence.”

The group said that although it had not yet been affected by the recession to the same degree as its rivals. “we do expect the latter part of 2009 to be challenging for a number of our businesses”.

Co-operative Financial Services (CFS) grew underlying shareholder profit by 11 per cent to £81.4 million, helped by growth in customer deposits and customer lending and new insurance sales. Since the end of the first half on August 1, it has taken over Britannia.

Co-operative Pharmacy raised operating profits 8.7 per cent to £14.8 million. Co-op Funeralcare operating profit grew 17 per cent to £28 million, but Co-operative Travel’s operating profits fell from £7.9 million to £2.5 million, hit by the recession.

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