McColl's boss Miller: Co-op stores acquisition is 'a significant step up'

The convenience specialist revealed earlier this month that it had bought 298 shops from the mutual in a £117m deal, as part of an aggressive strategy to expand its estate and grow market share.

McColl’s is on track to open its 1,000th convenience store by the end of the calendar year, with the acquisition of Co-op stores, which is subject to CMA approval, set to push it towards the 1,500 mark.

Miller, who hailed the purchase as “transformational,” told Retail Week he was confident that the new stores would quickly deliver strong sales figures.

“If you look at the like-for-like performance of our recent acquisitions and conversions, we’ve got a positive figure of 1% and that really supports the strategy we’ve been following since floating in 2014,” Miller said.

“We continue to make good progress on that strategy and the transformational deal with the Co-op to acquire 298 convenience stores really accelerates our growth ambitions.”

‘Standing still’

Hitting back at independent analyst Nick Bubb – who suggested McColl’s was “running hard to stand still” after posting a 2.2% drop in like-for-likes and an 8.1% uplift in pre-tax profit during the 26 weeks to May 29 – Miller said: “If we are standing still, the Co-op acquisition means we won’t be standing still for very long.

“If we are standing still, the Co-op acquisition means we won’t be standing still for very long”

Jonathan Miller, McColl’s

“Last year our EBITDA was £37.7m and we are adding in £16.4m historically from the Co-op stores.

“That’s a significant step up in the profitability of the business and we would hope to improve the stores that we are buying as well.”

McColl’s hopes to start refitting and opening the Co-op stores in January 2017 and aims to have converted all 298 shops within a 16-week programme.

Partnerships

Miller, who took the reins in March after former boss James Lancaster was named as McColl’s new chairman, said “there will be opportunities” across those stores for the retailer to integrate Subway shop-in-shops after admitting he was “pleased by the results we are getting so far” from the partnership.

McColl’s currently operates five Subways and is aiming to open six more by the end of the year amid plans to create a more “sophisticated” food-to-go proposition.

“Subway was a big step for us, taking on a quality branded franchise such as that. That’s been very successful”

Dave Thomas, McColl’s

After seeing early signs of success from that tie-up, McColl’s chief operating officer Dave Thomas hinted that the retailer could ink similar deals in the future.

He said: “Subway was a big step for us, taking on a quality branded franchise such as that. That’s been very successful and we are still getting learnings from that.

“There is the potential to do partnerships with other people – we are constantly being approached by other people, so our minds are always open to opportunities.”