McColl’s first-half profits hit by Co-op deal costs

Convenience specialist McColl’s reported interim profit before tax of £4.5m, down from £8.2m, affected by exceptional items and pre-opening costs.

Sales climbed 7.6% to £504.8m, “benefiting from the on-boarding of stores acquired from the Co-op”. About two-thirds of the stores were trading by the period ending May 28, and all by the end of July

Like-for-like sales edged up 0.2% during the half-year, and reached 1.4% in the second quarter, which McColl’s said was “in part supported by favourable weather and our evolving mix of growth products”.

In recently acquired and converted stores, like-for-likes advanced 2.8% in the half.

Adjusted EBITDA inched up to £16.5m from £16m, “despite being impacted by £1.3m pre-opening costs relating to the acquisition”.

McColl’s chief executive Jonathan Miller was pleased with the performance.

‘On time and on budget’

He said: “We are delighted to have completed the integration of the acquired stores, on time and on budget.

“We have welcomed over 3,500 new colleagues who have done a great job in supporting customers through the transition, and early trading is in line with our expectations.

“With all 298 stores now on board, they are expected to make a material contribution to sales and profit in the second half of the year and beyond.

“Our focus remains on enhancing our convenience proposition through growing market share, developing our product ranges and delivering excellent customer service.

“As the wider convenience and wholesale sector evolves and continues to grow, McColl’s is in a strong position to benefit. We remain confident that our standing as a leading neighbourhood retailer will allow us to continue to achieve further progress against our strategy and deliver sustainable returns for shareholders.”

He was confident in McColl’s prospects despite volatile trading conditions for retailers.

He said: “The recent outcome of the UK general election and continued uncertainty around the impacts of exiting the European Union continue to weigh on consumer sentiment and the general economic outlook, but McColl’s has a good record of trading resiliently through periods of economic instability.

“We have experienced a small amount of inflation in our business in the first half of the year and we will continue to work with our suppliers to ensure we only pass on input cost increases to customers when absolutely necessary.”