The Co-operative Group has blamed intense competition, faltering consumer confidence and government spending cuts for a sharp fall in sales at its food business.

Like-for-like food sales were down 3.6% in the first half of the year, the society announced today. Operating profits for its food business tumbled from from £171.6m to £135.4m in the 26 weeks to 2 July, while sales fell 4.6% to £3.7bn.

“At the full year we warned that the downturn was biting deeper than anyone had expected and predicted that challenging trading conditions would continue into 2012,” said chief executive Peter Marks.

“This has clearly proved to be the case. Indeed, it is the worst I have seen in over 40 years of retailing and against this backdrop, the results we are announcing today are in line with our expectations.”

Marks warned the society would “find it difficult to match the record profits we made in 2010”. But he added that when the economic upturn began, The Co-op would “be better placed than ever before to take advantages of new opportunities”.

It refitted 244 stores during the period and opened eight new stores. Plans are in place to open 30 stores in the second-half.

Group sales slipped 0.8% to £6.89bn, while underlying operating profits across the whole business fell from £308.1m to £275.1m.

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