69 jobs safe as Co-op sells its Ludlow and Newport branches

The Co-operative Group's branches in Ludlow and Newport are among 36 former Somerfield stores around the country which will be offloaded as the group focuses on convenience shopping.

Because the branches in Ludlow's Upper Galdeford and High Street in Newport are not considered part of the group's core estate, they are to be sold to the Food Retailer Group, an arm of restructuring specialist Hilco Capital.

The deal is expected to be completed in July, and will see the branches rebranded as Budgens.

It is not expected to lead to store closures or redundancies, with 920 staff from across the group moving over to the new company under a TUPE transfer agreement. Ludlow employs 35 people and Newport 34.

The details of the deal have not been released, but the Co-op said it would make a profit.

The former Somerfield stores are part of the 800-strong estate bought in a £1.6 billion takeover by the Co-op in 2008. However, huge write-downs in the value of the Somerfield business combined with a crisis at the Co-operative Bank to drag the Co-op to a £2.5 billion loss in 2013.

Last month the Co-op said about 300 stores from a 'non-convenience' estate of 700 shops could be sold.

The mutual offloaded 91 food stores last year, raising £175 million, because they no longer matched its "focus on convenience shopping".

Co-op Food chief executive Steve Murrells said: "An important consideration for us was that colleagues would have continued employment as a result of this sale, a principle we've applied to previous sales, including that of our pharmacy business to Bestway in 2014.

"This agreement ensures that 920 colleagues will continue in their jobs and have their terms and conditions maintained post-sale."

A spokesman for The Food Retailer Group said: "The change in ownership will not impact daily business and stores will continue trading as usual. All employees will transfer with the business, and there are no planned redundancies."

Earlier this year, grocery analysis body Kantar said the Co-op's sales rose at their fastest rate since it snapped up Somerfields in 2011, climbing 3.9 per cent in the 12 weeks to March 27.

The mutual also revealed in March that like-for-like sales across its 2,800 food stores grew by 1.6 per cent in the 52 weeks to January 2, while its funeral business saw sales climb by 9.9 per cent.

It said core convenience like-for-like sales grew 3.8 per cent last year, driven by investment in prices and products.

Underlying profits in the food business also rose 3.3 per cent to £250 million as strong sales and moves to cut costs boosted performance.