The Co-op Group saw sales edge higher over the past year but warned that it expects “inflationary pressure to continue” and affect profitability.
It came as the retail-to-funerals business continues with a transformation plan under recently appointed chief executive Shirine Khoury-Haq.
On Wednesday, the company said it benefited from “early and targeted action” against the tough economic backdrop, which included a shake-up that cut around 400 jobs last summer.
The group also sealed a £600 million deal to sell 132 petrol forecourts to rival Asda as part of the fresh strategy.
The Co-op has now reported that pre-tax profits increased to £247 million for 2022, £190 million higher than the previous year.
It said it would have fallen to a loss but received £319 million from the sale of the forecourts.
The group also revealed that company net debt significantly reduced to £333 million from £920 million as a result.
Meanwhile, group revenues were £11.5 billion for the past year, up from £11.2 billion in 2021, although it said there was a £150 million reduction caused by the forecourts deal.
Ms Khoury-Haq said: “It’s clear that our early action to significantly reduce our debt, improve our cash position and tighten cost controls has made a significant difference to the financial strength of our Co-op and has enabled us to look forward with confidence, despite continuing market uncertainty.
“We now have an even better foundation upon which to grow our businesses.
“We’re also looking to grow our membership, putting membership at the heart of our Co-op, with ambitious plans to both attract new members and deepen relationships with our existing members.
“We will continue to bring our vision to life to make a genuine difference for our colleagues, members and communities through these challenging times.”
The firm said these costs are set to “dampen profitability in the short term”.
Co-op chairman Allan Leighton said: “The inflationary challenges facing most consumer-facing businesses are well known, so for our Co-op to have delivered this level of performance over the year is encouraging.
“We are, rightly, judged by our members on both the financial and social value we can create and it’s clear that we’ve delivered on both sides of this equation.
“The future focus on growing membership is vital for ensuring the future success of our Co-op for generations to come.”