The Co-op is axing jobs as it battles to save £200million in the face of widening losses.

The mutually-owned group, which has more than 2,300 food stores and 800 funeral homes across the UK, said cost-cutting was needed to offset higher costs including tax hikes under Labour.

But interim chief executive Kate Allum refused to say how many staff would be affected across its 54,000-strong workforce.

The prospect of job losses came as the Co-op reported losses of £92million for the six months to July 4.

That followed losses of £75million in the same period last year when it was hit by a damaging cyber attack that sent it plunging into the red.

The firm said business was hit by weak consumer confidence and £78million in extra costs, including taxes on employment such as Labour's hike in national insurance contributions.

The Co-op was sent reeling by a costly cyber attack in April last year and then more recently it was forced to defend itself from claims of a 'toxic' environment at the business.

A management shake-up has followed, with former chief executive Shirine Khoury-Haq stepping down in March, followed by chairman Debbie White in August, while managing director Matt Hood quit earlier in the summer.

The Co-op said its latest half-year saw sales rise 2.4 per cent across the group.

Sales at its food stores lifted 2.6 per cent, but this was a modest increase on a year earlier when the costly hack in April 2025 knocked first half revenues by £206million and delivered an £80million blow to profits.

The group said food sales in the second half are recovering thanks to recent revival efforts, such as investing in promotions including its Aldi price match.

Allum, who took the reins at the end of March, said: 'The first half was characterised by difficult markets and low consumer confidence, especially for food retail.

'Against those conditions, we made decisions to drive trade – investing in promotions and investing in our stores – while also mitigating rising costs.'

She said trading was turning around, with shoppers spending more and visiting its food stores more frequently, but said there was 'more work to do'.

Allum added: 'Conditions remain challenging, but we see reasons for confidence across our portfolio, having delivered strong growth in areas such as online convenience shopping and funerals.

'We expect to see a stronger performance in the second half than the first, with sales growth and improvements in profitability.'

She said the group has also been focusing on its culture after reports earlier this year that senior managers had complained of a 'toxic' environment at the retailer.

'We’ve been listening and doing and explaining and making sure we’re communicating in the best way possible,' Allum said.

The group is also pressing ahead with a planned takeover of smaller rival Southern Co-op in what will add 330,000 members to its existing seven million, as well as about 300 food, funeral and Starbucks coffeehouse sites.

The Competition and Markets Authority is investigating the deal and has concerns over some local areas where it believes competition could be 'substantially' lessened.

The firms had until September 22 to put forward measures to resolve any potential competition issues or face a full-scale Phase Two investigation.