Co-op chief executive steps down amid culture concerns and cyberattack fallout

Co-op Group has confirmed that chief executive Shirine Khoury-Haq will step down, following mounting pressure over workplace culture concerns and a difficult year marked by losses and a damaging cyberattack.

Khoury-Haq, who has led the organisation since 2022 and spent seven years with the business, will be replaced on an interim basis by Kate Allum while the board begins the search for a permanent successor.

Her departure comes after reports of a “toxic culture” within senior leadership, alongside claims of falling morale, high-profile departures and operational challenges across the group.

The Co-op revealed that it swung to an underlying pre-tax loss of £126 million in its latest financial year, compared with a £45 million profit the previous year. Revenues also declined by 2.3 per cent to £11 billion, reflecting disruption to trading and changing consumer behaviour.

The group said the results were heavily shaped by its response to a major cyberattack, which forced it to restrict systems in an effort to contain the threat. While necessary, the measures had a significant commercial impact.

The company estimates the attack reduced revenues by £285 million and cut profitability by £107 million, including £86 million in lost margin and £21 million in additional costs.

The food division, the largest part of the business, was particularly affected, with sales falling 2 per cent to £7.25 billion. The disruption led to empty shelves in stores and altered shopping patterns, which continued to weigh on performance even after systems were restored.

Market share also slipped, falling to 5 per cent over a 12-week period, down from 5.3 per cent a year earlier, as the group lost ground to discounters and larger supermarket rivals.

Alongside the financial pressures, the organisation has faced scrutiny over its internal culture. A letter sent to board members, reportedly from senior staff, described an environment of “fear and alienation”, raising questions about leadership and decision-making at the top of the business.

The Co-op said it did not recognise those criticisms as representative of the wider organisation, emphasising its co-operative structure and commitment to inclusive decision-making. However, the reports have added to the challenges facing the group during a period of significant change.

Khoury-Haq said the timing of her departure reflects the next phase of the company’s transformation strategy.

“It has been an honour to lead our Co-op,” she said, adding that the business is now positioned to move forward with a programme of stabilisation and long-term reform that will extend beyond her planned tenure.

Her strategy had focused on rebuilding the group’s financial position, reducing debt and modernising its IT systems — issues that have been central to the Co-op’s operational challenges in recent years.

The company said she had overseen a significant turnaround between 2022 and 2024, including a 95 per cent reduction in debt and a 30 per cent increase in profits over that period, before the latest setbacks.

The Co-op, which employs around 54,000 people and operates more than 2,300 food stores and 800 funeral homes, continues to face intense competition across its core markets.

Discounters such as Aldi and Lidl have expanded aggressively, while established rivals including Tesco and Sainsbury’s have strengthened their positions, leaving the Co-op under pressure to differentiate its offering.

At the same time, the wider economic environment remains challenging, with inflation, shifting consumer behaviour and geopolitical uncertainty affecting demand.

Khoury-Haq acknowledged these headwinds, warning that “trading conditions remain difficult” and that external pressures are likely to persist.

The board now faces the task of appointing a new chief executive capable of navigating the next stage of the group’s recovery and transformation.

Group chair Debbie White thanked Khoury-Haq for her leadership during a turbulent period, particularly in guiding the organisation through the cyberattack and broader restructuring efforts.

For the Co-op, the leadership transition comes at a critical juncture. Restoring profitability, rebuilding trust internally and externally, and adapting to a rapidly evolving retail landscape will be central to its future.

As the organisation seeks to stabilise after a challenging year, the next phase of its strategy will be closely watched by both the market and its millions of members.

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Co-op chief executive steps down amid culture concerns and cyberattack fallout