The introduction of a national distribution centre in June will be one of the key steps to recovery for the Co-operative Group, according to chief executive Martin Beaumont.
Food profits slumped by 39% to £74.5m on sales of £3.44bn, down 0.8% to the year ending January 8. Like-for-like food sales fell by 1%.
Although increased competition played a part, Beaumont said logistics, ranging, pricing and availability were as much to blame.
However, he said that the new distribution centre for ambient goods in Coventry, and investment in the second half of the year, would put the business back on the profit growth path.