McColl’s warns of profit headwinds as its seeks to raise capital

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McColl’s has said it may struggle to meet management expectations for the full year if availability issues continue into the second half.

The convenience store retailer recorded a loss after tax of £6.3m in the 26 weeks to May 30, down 530% year on year.

Half-year revenues were down 5.3% to £572.7m after the retailer shuttered 43 of its stores, but like-for-like sales inched up 1% for the period as more customers shopped locally during lockdown.

McColl’s also reported an adjusted EBITDA decline of 13.2% to £24.3m, attributed to ongoing Covid-related costs and lower gross profit.

Throughout the six-month period, it converted 25 of its stores to the Morrisons Daily format, with a total of 56 stores now in operation.

The retailer intends to launch capital raising in order to accelerate growth plans – including the rollout of the Morrisons Daily format, investing its store estate, and strengthening its balance sheet.

Chief executive Jonathan Miller said: “We have continued to play an important role serving local neighbourhoods through the challenges of Covid-19, sustaining like-for-like sales growth despite the strong prior-year comparator in Q2 following the first national lockdown.

“Many of the changes in consumer behaviour we have seen since the onset of the pandemic have continued in 2021 with customers spending less on impulse goods, but buying more take-home and multipack products, impacting overall margins.

“Alongside the impact that the industry-wide shortage of delivery drivers has had on our product availability, we are confident that these temporary trading effects will reverse as restrictions ease and distribution returns to normal.

“During the period we made good progress against our strategic initiatives. We are delighted with the performance of our Morrisons Daily conversions and we now have a blueprint for this model that offers a strong return on investment.

“Looking ahead, whilst the wider economic outlook remains uncertain, we have clear demand for our grocery-led convenience offer, and our focus in the second half will firmly be on the continued roll-out of the Morrisons Daily stores, to help drive sustainable, profitable growth over the medium term.”