Co-op Department Stores deal with Vergo confirmed

The East of England Co-operative Society has announced today, Saturday 11th July 2009, that it has completed the deal for Vergo Retail Ltd. to take over its Department and Home Stores business with immediate effect, whilst the Society retains freehold ownership of all the stores involved in the transaction.

The deal protects the employment of around 350 Co-op employees at the stores concerned and within the associated non-food distribution depots, all of whom have transferred to Vergo Retail under TUPE arrangements.

A full list of stores involved in this announcement is given below - no other East of England Co-op trading outlets are affected.

Richard Samson, Chief Executive of the East of England Co-op said:  “I am pleased that we have successfully concluded this deal, which secures continuing employment for all of our colleagues in the stores concerned and we wish them every success with their new employer and extend sincere thanks to them for their past service.”

Mr Samson added:  “The new operators will be taking over the running of a well established group of stores with a large number of loyal customers and we anticipate the future bringing positive benefits to all concerned.  I must also extend appreciation to our Members and customers for their support.”

“The stores involved total less than 6% of the Society’s total business and we will continue to be the largest independent retailer in East Anglia operating over 200 trading outlets.  Our multi-million pound capital development programme is also continuing, with several major food store refurbishments having already been completed in recent months and more to follow.”

David Thompson for Vergo Retail Ltd., said: "We are delighted to have expanded our business into the East of England and look forward to a successful future for our new stores.  Major cosmetic changes may not be immediate, as initially my team will work closely with our new colleagues to review their product offer and develop a strategy for improvements.  Most important to us as a company will be fulfilling our customers’ needs and expectations which is always our top priority."

Norrie Slater, Divisional Officer, Eastern Division of USDAW commented:  “We are extremely pleased that this transfer has been successfully concluded guaranteeing the employment of around 350 employees.   The East of England Co-op has kept us informed of discussions and how the deal has been progressing, which is much appreciated and a good example of best practice.   We will continue to represent the staff involved and look forward to working in partnership with Vergo Retail.”

Any orders previously placed with the Co-op’s Department and Home Stores will be fulfilled and any deposits in place are secure with Vergo Retail taking over all obligations to customers, including any returns or guarantees on past purchases.

The online electrical store launched last year by the East of England Co-op will continue to operate enabling a wide range of electrical goods to be sourced from their local Co-op through the web site at www.eastofengland.coop while still enjoying the added benefit of Members’ Dividend on these purchases.

In an arrangement with Vergo Retail, the Society will continue to provide Member Service Departments within selected larger department stores, enabling Co-op Members to access Dividend transactions as normal.  Recently issued Members’ Dividend Vouchers will continue to be accepted in the stores transferring to Vergo Retail.

Purchases within the stores will no longer attract Co-op Dividend, but Vergo Retail operates a customer loyalty card called the Vergo VIP Card, which will enable a reward to be earned on qualifying purchases. 

The Co-operative Travel branches within the stores will also continue to operate and it is expected that other concession departments will remain in place.

The East of England Co-operative Society stores involved in the proposed transfer to Vergo Retail are as follows:

Department Stores:

St Stephen’s Street, Norwich
Market Place, Great Yarmouth
Long Wyre Street, Colchester
Station Road, Clacton-on-Sea
Carr Street, Ipswich and adjoining Food Hall

Homestores:

Hamilton Road, Felixstowe
Tavern Street, Stowmarket
Oxford Road, Clacton
Peartree Road, Stanway
Newland Street, Witham
Main Road, Dovercourt

Jewellery Department:

Eld Lane, Colchester

The East of England Co-op will retain the freehold of the above premises with all affected stores being leased to Vergo Retail.

The two small Home Stores in Weaver’s Court, Halstead and at Sizewell Road, Leiston, will be incorporated within the Society’s existing large supermarkets located alongside.

The transfer of the Department Stores and Home Stores business to Vergo Retail does not affect other areas of the Society’s business and it will continue its major development programme across the region, which includes refurbishments and new build food stores.  The Society’s core business is food retail, which continues to record excellent like-for-like sales increases.  In the first quarter of 2009 the Society’s Food Retail Group, which now consists of 134 stores, showed a like-for-like increase of more than 5%.

Last year, the Society spent a record £27.7 million on its capital development programme, which has been entirely self-funded and it remains in the enviable position of being able to continue modernizing its operations without the need for borrowing.