Members of The Co-operative Group have taken to social media to berate it for scrapping its interim dividend.
This week, the society revealed it would not be paying out its half-yearly dividend, due this month, because it made a loss of £599m in the six months to 6 July.
The Co-op reintroduced its dividend scheme in April 2004, paying its seven million members a share of its profits twice a year based on how much they have spent every six months.
“As a Co-operative member I’m feeling extremely mugged off this morning. Not only have I spent the best part of £2,500 between January and June on food shopping and electrical items… but I’m also a regular user of my membership card in the belief that you give back a little of what we put in,” one member posted on The Co-operative Food’s Facebook page.
“As a Co-operative member I’m feeling extremely mugged off this morning”
Another posted: “They have lost my custom now, I’m disgusted they have waited until now to do this. People rely on that little boost at Xmas. You should be ashamed of yourselves.”
Staff also made their views known: “Great, I can imagine the earache I am going to get from customers who we have got to sign up for membership, who when we list the benefits we tell them they get a share of the profit vouchers twice a year,” said one.
Another said: “This is the most important time of the year and if you get the marketing and goodwill wrong it can be a disaster as all the seasonal stock has been ordered and is now in the stores or distribution centres.”
The move comes at a bad time for the society, which is struggling to turn around ailing food sales. According to Kantar Worldpanel, it was the only retailer to report negative like-for-like sales, of -1.2%, in the 12 weeks to 13 October. Its market share has also fallen from 6.7% a year ago to 6.4%.
The society has acknowledged failing to pay a dividend could hit trade. In a recent document sent out to bondholders of The Co-operative Bank, it said: “If in the future the timing or size of the dividend changes, or no dividend is declared, there is a risk that this will have a negative impact on food sales, which in turn could adversely affect the group’s business, results of operations and financial performance.”
This week, the Co-op revealed it would instead give members a voucher for 10% off their shopping every time they spend more than £5 between 18 November and 15 December. The vouchers can be used up until 24 December.
The move got a mixed reaction from shoppers and staff.
One member posted on Facebook: “So seven million customers are told they are not getting a divi that they accrued and asked to spend more. You’re having a laugh. Points are now worthless, so is the membership card.”
But an employee posted: “Thank you very much, it’s really appreciated at this expensive time of the year. Please pass comment up the ladder. Great call, well done and thanks.”
Regional co-op societies, meanwhile, have started releasing their plans for dividend payouts. Midcounties Co-op - the UK’s second biggest retail co-op - said it would be issuing more than £1.5m of vouchers to members on 29 November as their share of its profits.
Midlands Co-op has paid a dividend of 1p per point to over 140,000 of its members. Members of Lincolnshire Co-op will share a windfall of £1.8m. Anglia Co-op will reveal its dividend on 19 November.
The Southern Co-operative has said it is still on course to pay out a dividend in 2014: “The Southern Co-operative has paid out 2p in every £1 spent on qualifying purchases as its share of the profits for the past three years and as we’re a profitable business in growth, there is no reason to think that the payout will differ significantly from this at our annual payout in June 2014 (based on our financial year to Jan 2014).
“In the meantime, we have also sent our members an exclusive voucher offer for December (valid 2-24 December); £2 off when spending £10 or more and £5 off when spending £25 or more, valid only in The Southern Co-operative’s stores across the south of England.”
Read this: Co-op divi doldrums