CEO John Chillcott blamed the loss on "fundamental restructuring costs" including its property being devalued by £8m.
However, the company's trading profit before exceptionals rose from £2.5m to £3.7m and like-for-like food sales were up 10%, helped by rebranding food stores to Co-operative Food.
After disposing of three loss-making furniture stores and one food store this year, the company was in a strong position, Chillcott claimed.
"Our food business is very strong, although our non-food sales are suffering," said Chillcott, who was promoted to the role in September 2007.
"Net debt is reducing through the sale of properties. We have improved our operating profit," he explained. "We will become profitable again next year."