McColl’s warns on profits due to Palmer & Harvey demise

The convenience specialist said that due to the impact of Palmer & Harvey’s collapse in the first half of its financial year and strong tobacco sales causing a lower than anticipated conversion of sales to profits, its full-year EBITDA was now expected to be approximately £35m.

The group said its accelerated roll-out of Morrisons-supplied products across 1,300 of its stores as a result of Palmer & Harvey’s collapse had also “severely disrupted [its] plans for the launch of Safeway”.

McColl’s said that although the transition was now completed, there were “a number of challenges” around ranging and promotions which still needed to be addressed.

The convenience specialist’s revenue and like-for-like sales were broadly flat in the 13 weeks to November 25.

On a 52-week basis, like-for-likes declined 1.4% while overall revenue rose 8.3%, buoyed by its acquisition of 298 Co-op stores last year.

The retailer acquired 11 new convenience stores during the year and refreshed 59 of its existing store estate, delivering an average sales uplift of 5%.

McColl’s year-end net debt is lower than previously expected at £100m.

Chief executive Jonathan Miller said: “2018 has been a very difficult year for the business, marked by unprecedented supply chain disruption and ongoing challenges. I am, however, extremely grateful for the continued hard work of all my colleagues and the ongoing support of Morrisons.

“Looking ahead, we expect competition in the grocery retail sector to remain intense and we face into significant cost pressures.

“Important to our future success will be continuing to develop our partnership with Morrisons, alongside our plans to enhance our neighbourhood convenience offer by improving the quality of our estate and our overall customer experience.”