McColl’s slips to half-year loss as sales edge down

The convenience chain saw a loss before tax of £0.5m in the 26 weeks to May 24, down from a £0.5m profit in 2019. Sales for the wider period dropped 1% to £604.8m, as the retailer contended with store closures and reduced services such as scratch cards, but this was offset by higher demand.

However, like-for-like sales grew 8.3% for the period, which McColl’s said accelerated to double-digit like-for-like growth in the second quarter, as the UK was plunged into lockdown. 

Chief executive Jonathan Miller said: “We’ve seen some quite extraordinary changes [during the lockdown] with very strong demand, reaching double-digit like-for-like growth in some weeks. There’s also been a big shift in what people are buying from us - our food and alcohol sales have been particularly strong, which endorses our strategy. 

“We were focusing on developing a more modern, convenience store offering anyway, with food and alcohol at the arrowhead. We’ve seen an acceleration of that. We’ve also seen consumers spending less on impulse in confectionery and snacks and more on take home and multipacks”. 

McColl’s said it had paused the divestment of certain stores across its estate during the pandemic in order continue to support the needs of local communities, however, Miller said the coronavirus had not changed the convenience store retailer’s strategic goals of slimming its portfolio down to some 1,100 stores in the future. 

Gross margin edged down to 24.9% from 25.4% the previous year, which McColl’s attributed to shoppers “moving away from impulse purchases to lower margin take home products as well as multi-buys and value items.”

Miller added: “We have seen an extraordinary change since the onset of the crisis. Strong demand, reaching double-digit like-for-like sales in recent months, has been accompanied by a significant shift in the pattern of trade.

“Food grocery and alcohol sales have been particularly strong, in line with our longer-term strategy to grow these categories as part of our total sales mix. Meanwhile, customers have been spending less on impulse and buying more multipack products. 

“Fundamentally, the pandemic has served to reinforce our conviction in our ongoing strategic change programme to serve our customers with a modern, local convenience offer with better meal solutions, fresh groceries and alcohol. What is clear is that the strategic importance of our neighbourhood stores and convenience retail to local communities has never been greater and, through implementing our strategy and improving our customer proposition, I remain confident in our long-term prospects.”