Co-op Chief Executive Resigns Following Turbulent Year
The Co-operative Group has confirmed that its chief executive, Shirine Khoury-Haq, will step down this weekend, concluding a challenging period for the mutual that included a significant cyber-attack and recent claims of a toxic organisational culture.
Khoury-Haq will depart on 29 March, with Kate Allum, a board member and former chief executive of the dairy group First Milk, appointed as interim boss while a permanent successor is sought. This leadership change coincides with the company reporting an underlying loss of £125 million for the year, a stark reversal from a £45 million profit the previous year.
Financial Impact of Cyber-Attack
The financial downturn was heavily influenced by a damaging IT hack, which forced the shutdown of some systems and resulted in a £107 million profit hit. Sales at Co-op fell by 2.3% to £11 billion in the year to 3 January, with the mutual's shops experiencing gaps on shelves following the April cyber-attack, which knocked £285 million off sales.
The group, which operates over 2,000 convenience stores, more than 800 funeral parlours, and an insurance and legal advisory business, stated it lost trading momentum while focusing on recovery from the attack. It also faced a contracting convenience market as household budgets came under pressure, alongside layered cost headwinds of approximately £150 million from increases in employers' national insurance, pay, and packaging taxes.
Denial of Link to Culture Allegations
On Thursday, Khoury-Haq denied that her resignation was connected to allegations of a toxic culture within the business. She emphasised, "My decision to leave was very much a personal decision. The reason is I want to go and do something else." However, her departure follows reports last month of concerns about the culture at the top of the group.
In February, the Co-op defended the behaviour of its bosses after reports emerged that senior managers had complained of a toxic environment. The grocery and services chain asserted it did not believe the criticisms represented the views of its broader leadership and colleagues. According to previous reports, a letter sent to the chair and another board member claimed to reflect the views of a large number of senior managers, raising complaints about a culture of fear and alienation, where some staff felt scared to raise concerns in front of management, including Khoury-Haq.
Response to Feedback and Future Strategy
Khoury-Haq noted that Co-op colleagues had reported to her they did not recognise the toxic culture allegations, but acknowledged there was some discomfort in areas of reorganisation. "They said to us that there were concerns where we had not communicated as clearly as we could have," she added. "We've of course taken on that feedback."
In a written statement, she reflected on her tenure, saying it had "been an honour to lead our Co-op." She continued, "Following last year's cyber-attack, the organisation is now ready to deliver on an ambitious strategy of stabilisation and transformation. This extends beyond the timeframe I had planned for my CEO tenure and now is the right moment to hand over to leadership that can commit to seeing the strategy through."
Khoury-Haq's exit comes after four years heading the company and almost seven years at the business, marking a significant transition for the Co-op Group as it navigates recovery and cultural challenges.
