The group also announced its first-half results, which showed a return to profit after an annual loss of pounds 2.5bn for 2013. In the six months to 5 July, pretax profit was pounds 116m compared with a loss of pounds 1bn in the first half of last year.
But operating profit, excluding losses on discontinued operations, was down to pounds 43m from pounds 105m, as profits fell at its food and funeral businesses and it made losses in general insurance and legal services.
Pennycook, who stepped in when the previous boss,
The Co-op almost collapsed last year, and governance reform was seen as vital to stabilise the business and allay the concerns of banks, to whom it owed pounds 1.4bn.
Pennycook had said he was not interested in being chief executive permanently. But yesterday he said governance reforms, including installing business people as directors to replace largely amateur Co-op members, had changed his mind. He also claimed to have been won over to the idea of cooperative values.
Pennycook said: "For me, the defining moment was the governance change at the weekend. That unlocked for me the attractive prospect of leading the organisation permanently. I had a very strong view that this is a national institution and a unique organisation which should be important in the nation.
"After many years in the plc world, I was very excited by the possibility of operating in a cooperative environment, where that purpose really is unique."
Pennycook joined the Co-op as chief operating officer in
He was part of a new management team headed by Sutherland, a former B&Q head. Sutherland was unpopular with members who believed he wanted to turn the group, owned by its 8m customers, into a plc. When Sutherland quit in March, he branded the Co-op "ungovernable".
Pennycook has agreed to sell the Co-op's farms for pounds 249m and pharmacy business for pounds 620m. On Tuesday, the group announced it was selling its
Pennycook said the group would sell about 200 large food stores in the next few years and replace them with convenience stores, whose underlying sales rose by 4% in the first half. He warned that after the loss of "a number of thousands" of jobs, there would be more job reductions in store for the group's 87,000 employees.
About half the money from selling the three businesses will be used to pay off borrowing, leaving about pounds 1bn of debt, which Pennycook said was manageable.
The rest will be used to revamp stores, cut prices and launch new products. The group's dividend to members will be put on hold.
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